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The Sustainable Business 




Taking the first steps towards understanding, implementing 
and managing sustainability from a cost/profit perspective. 




The Sustainable Business 



By Jonathan 



With special thanks to the reviewers: 

Walter R Stahel 
Hunter Lovins 
David Grayson 





For further information about the authors, see ps 



1 



Contents 



Introduction 



8 Preparation 

9 1. Fundamentals 

16 2. What the Reformer is Up Against 

23 3. Establishing Sustainability as an Objective 



29 Preservation 

30 4. Mapping the Waste Elimination Process 

34 5. On-Going Measurement and Record Keeping 

38 6. Taxes and Legislation 

42 7. The Perils of Green Washing 

46 Processes 

47 8. Service and the Performance Economy 
52 9. Leasing and the Performance Economy 
55 10. Cooperative Networking 

59 11. Lean Thinking 

65 People 

66 12. Understanding the Importance of Customers 
72 13. Managing Change 

76 14. Putting Together a Team 

79 Place 

80 15. Building Better Buildings 
89 16. Saving Water 

93 17. The Macro Advantages of Micro-Power 

99 Product 

100 18. The Hidden History of Products 
107 19. Minimising Packaging 

110 20. Reuse, Remanufacturing, and Recycling 

119 Production 

120 21. Sustainable Production Locations 
122 22. Clean Production 

129 23 Motors and Pumps 

133 24. Reducing Waste at Work: Getting Started 

139 End Note 

140 Reference 

150 About the Author 

152 About EFMD 



© Copyright 2010 by the European Foundation for Management Development and Jonathan T. Scott. All rights reserved. The moral rights of the author and 
publisher have been asserted. No part of this work may be reproduced, offered for sale, sold, traded, or utilized in any form by any means, electronic or mechanical, 
including photocopying, microfilm, and recording, or by any information storage or retrieval system without proper attribution to the author, the publisher, and 

the sources mentioned herein 



2 



Introduction 



Sustainability is often confused with the term going green'. 
Broadly speaking, however, the capacity for continuance into the 
long-term (which is one of many sustainability definitions) is about 
more than the environment. Make no mistake, the environment 
should be of paramount concern to all of us for the simple reason 
that every business (and life) resource comes from it. 

That being said, focusing only on the environmental aspects of sustainability is both 
shortsighted and partial — not unlike claiming that good health is solely about vegetables. It is 
therefore important to note that sustainability embraces the legal, financial, economic, 
industrial, social and behavioural arenas as well as the environment. From a business viewpoint 
it can be argued that sustainability is about reducing expenses - including future expenses - in 
every conceivable form so as to facilitate longevity and competitiveness. These expenses consist 
of the costs of short-term thinking, the problems and costs associated with waste, the spiralling 
cost of raw materials and resource deficits (resulting from an increasingly affluent and growing 
population all of whom are competing for the world's finite supply of resources), costs created or 
exacerbated by poorly designed products and production processes, the costs of climate change 
(e.g.: property damage and crop failure), and the costs of unemployment and underemployment 
- to name just a few. 

In the 1980s, the Brundtland Commission, a UN 
investigative body, defined sustainability as development that 
meets the needs of the present without compromising the 
ability of future generations to meet their own needs. 



As a teacher, it is fascinating to watch student reactions when sustainable business practices 
are introduced in the classroom. Most are dumbfounded by the cost-savings and profits 
involved and want to know more. A smaller number, however, respond differently. With their 
lips pursed and their arms folded across their chests, they refuse to believe in what British 
business consultant John Elkington referred to in 1994 as the 'triple bottom line' - the financial, 
environmental, and human costs of doing business (wealth creation, resource efficiency, and job 
creation) as well as the significance and importance of each of these 'pillars', and how they 
influence one another. Interestingly, although most of the people who disregard sustainability 
readily admit that the world is facing profound problems - and that these problems are not 
going away anytime soon - their lack of experience, knowledge, and comfort with long-term 
thinking often forces them to place sustainability under the label of 'environmentalism' (or 'fad') 
so as to dismiss the subject out of hand. But I'm getting ahead of myself. 

To understand sustainability it's essential to begin by first comprehending the big picture - 
i.e.: to acknowledge that sustainability is about longevity and to develop an awareness of what 
that encompasses before analytic thought does its (necessary) reductive work. Rather than 



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Introduction — © The Sustainable Business 2010 



building up from particulars to generals (the empiricist method), one must begin with generals 

— an in-place, intuitive wisdom of the logic behind long term balance, proportion, and profit, 
what it entails, and why it is important. Once that is obtained, most people instinctively gain a 
better idea as to where to direct their analytic attention. Again, it is difficult to expect progress 
by focusing only on one area (for example the environmentalism aspects of sustainability). The 
problem with this (the empirical) approach is that once a few facts become clear it's tempting to 
believe that they possess an independence all their own and to rest in them and believe that they 
are the foundation of what is being sought (theologians call this 'idolatry') 1 . Obviously, dividing 
the world into parts is something we all do to ease understanding, but in doing so something is 
always devalued - and what is diminished is often an awareness of and contact with that which 
can only function as a whole. 2 

Several years ago I created an alliteration using seven words (all beginning with the letter P) 
to describe the waste-reduction aspects of sustainability in a business application context (see 
the left column of FIGURE 1) and the interplay they have on one another. Alliterations are 
never perfect. However, the 7-P model has proven to be helpful both in and out of the classroom 
so it has been used to structure this guide. Briefly, the 7-P's are as follows: 

Preparation - Setting the stage for change (physically and psychologically), accepting the 
breadth and depth of sustainability (e.g.: all the financial implications and the fact that 
sustainability is not about sacrifice or being independent) and understanding what the reformer 
is up against when trying to implement profitable, long-term practices (e.g.: apathy, ignorance, 
short-term thinking, and what Machiavelli called 'the incredulity of mankind, who do not 
believe in anything new until they have had actual experience of it.'). 

Preservation - encompasses two areas: internal (collecting and displaying real-time 
measurement) and external (keeping ahead of laws, pending legislation, trends, and 
developments). 

Processes - sustainable belief systems, philosophies, business models and thought patterns 
that help match a business with customer demands, core capabilities and best practices. 

People - accepting the importance of training and education and working diligently to avoid the 
wasting of people, specifically: employees (who seek security and motivation), stakeholders (who 
want a return on their investment), customers (who want safe, value-laden products), and the 
world community - including the two- thirds of humanity who are currently left out of the global 
economic loop (who desire jobs and inclusion) and who represent an economic force all 
their own. 

Place - the buildings and places where work is performed and/or products are sold. 

Product - goods and services that are free from unnecessary waste ('non-product') and toxins 

- and designed so that the materials, energy, and manpower that comprise them (and their 
packaging) are treated as investments and continuously reused. 

Production - the physical, mechanical, biological, and chemical processes used to transform 
raw materials into products or services - and transport them. 



© EFMD www.efmd.org 



Introduction — © The Sustainable Business 2010 



Figure 1 

The 7-P Application Model (toward sustainability) 

© 2008 Jonathan T Scott 



UNDERSTANDING MATERIAL RESOURCES IMPLEMENTATION THE GOAL 

1 111 11 11 11 11 11 111 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 111 11 11 1 111 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 111 11 11 11 1 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 11 11 11 11 111 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 11 111 11 11 11 11 1 



STRATEGY 



Preparation 



Processes 
Preservation 



THE CATALYST 

People 



t 



Energy 



Water 



Raw Materials 



Physical Waste 



Assign Responsibility 



Display appropriate 
measurements 



Educate and involve 
all employees 



Put agreed ideas into action 



TACTICS 


Tools & Equipment 
System Performance 




Place 




Product 


Tabulate the results - make 


Production 


improvements, keep going... 



Waste Minimisation 



Resources Maximisation 



Cost Minimisation 



Resource Deficit Prevention 



Achieving optimal outputs with minimal inputs (doing more with less) 

Obtaining 100% value from purchases and investments 

Economically reusing inputs and outputs for as long as possible 



I 



What happens inside the classroom often reflects what goes on outside it - and vice versa. 
Although the word 'sustainability' is still either dismissed or misinterpreted by too many 
businesses and business schools (many still see it as a fad), it is slowly gaining recognition as a 
viable subject for study. In 2004, when I first suggested adding it to the curriculum of a business 
programme, the president of the university made a throwing gesture with his left hand and 
invited me to exit his office by loudly growling, 'GET OUT OF HERE!' Five years later he 
presented me with an award for outstanding achievements in teaching. To his credit, he refused 
to ignore the over $2 million my (first year) students showed local businesses they can save by 
adopting waste-minimisation practices. The progress I made with other university 



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Introduction — © The Sustainable Business 2010 



administrators occurred in a more opportunistic way. For example, one programme coordinator 
resisted every attempt made to introduce sustainability as an elective course - until she took a 
two-year maternity leave. Three minutes was all that was needed to convince her replacement 
that sustainability is not only viable as a business subject, it is vital - something the school's 
students seemed to know intuitively. The first semester it was offered, Managing the New 
Frontiers, a basic course on waste minimisation as a first step toward sustainability, became the 
most popular elective in the school's history (a record it still holds). 'Most business schools only 
offer sustainability if students demand it,' Hunter Lovins explained in an e-mail sometime 
afterwards. 

Although Hunter and the other reviewers and contributors associated with this publication 
are happy to note that more business schools are recognising certain aspects of sustainability 
and that a number of them are adding bits and pieces of it to their curriculums, many of us 
believe that few schools go far enough. Instead, what usually happens is that one or two courses 
highlighting a few components of sustainability are introduced and the matter is considered 
settled. Once again, sustainable thinking (i.e.: long-term thinking) is a viable, basic, and 
necessary concept that should be an integral part of every business subject (imagine, for 
example, if long-term thinking had been applied in the financial industry before the 2008 
financial meltdown). It is frustrating to have to note that examining the inputs of a business as 
well as the activities that go on inside it, followed by the exiting of its products (and their 
marketing and distribution) is considered perfectly legitimate in academia - yet when what 
happens afterward is approached for study, too many people who call themselves business 
scientists still put their foot down (the academic equivalent of stating 'that's not my job'). For 
example, I have been told - and I am still being told - the following in regards to including 
sustainability-based thinking in business school curriculums: 

- 'What does this have to do with academia?' 

- 'Teaching such subjects would be against the law.' 

- 'This is environmentalism, not business.' 

- 'This is not worthy of study, it's a fad!' 

- 'Sustainability is not scientific' 

- 'What's in it for us?' (this was uttered by the head of Corporate Social Responsibility at an 
esteemed university in western Europe) 

It should go without saying that any institute that calls itself a business school is obliged to 
study all aspects of business - not just those it deems worthy of its attention. Scientific study is 
about exploring what we do not know, or what we know little about, or that which shows 
promise, as much as it involves the continuing study of what we already are certain about (or 
think we are certain about). 

'A misconception about science is that science is about what we know,' explained Dr. Olivia 
Judson in a recent op-ed piece for the International Herald Tribune. She continues, A colleague 
told me that when he was studying science at school, the relentless focus on the known gave him 
the impression that almost everything had already been discovered. But in fact, science — as the 
physicist Richard Feynman once wrote — creates an 'expanding frontier of ignorance,' where 



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Introduction — © The Sustainable Business 2010 



most discoveries lead to more questions. Moreover, insofar as science is a body of knowledge, 
that body is provisional: much of what we thought we knew in the past has turned out to be 
incomplete, or plain wrong. (A second) misconception about science comes from the impression 
that scientific discovery progresses as an orderly, logical 'creep'; that each new discovery points 
more or less unambiguously to the next. But in reality, while some scientific work does involve 
the plodding, brick-by-brick accumulation of evidence, much of it requires leaps of imagination 
and daring speculation.' 3 

Thomas Kuhn in The Structure of Scientific Revolutions states that scientists today all-too- 
often engage in 'group think' taught in a certain 'school' of theory with the result that mere facts 
are ignored in order to save reputations, careers, and perhaps avoid more work (which suggests 
that the term 'peer-reviewed' amounts to little more than exposure to group think). 4 Richard 
Horton, editor of The Lancet agrees. When commenting on the techniques used by conservative 
thinkers to snuff out the paradigm shifting and unorthodox, he calls the opinions of peers 
'biased, unjust, unaccountable, incomplete, often insulting, usually ignorant, occasionally 
foolish, and frequently wrong.' 5 

Even the Financial Times has thrown its hat into the ring with a lead story explaining how 
companies are becoming increasingly vociferous with their complaints about irrelevant business 
school curriculums. Solipsistic academic theories based on limited sets of empirical experiences 
are also mentioned as a turn-off. One corporation that spends a small fortune educating its 
executives put it this way, 'Business schools should spend more time listening to clients and 
developing course design in accordance with our requirements, not theirs'. 6 

Several years ago, when trying to make headway against those who oppose the study and 
teaching of sustainable business practices, I phoned Walter Stahel, a pioneer in the development 
of closed-loop sustainability concepts, to ask for guidance. 'Most business school academics are 
economists,' he told me, 'which means they've been trained to think in two-dimensions. The 
reason they don't understand sustainability is because it's a three-dimensional issue.' 

Most economists are indeed taught to collect data and express it using an X and Y axis - with 
the end result being something akin to the old parable about three blind men examining an 
elephant ('It's like a giant piece of felt,' says the first blind man, holding its ear. 'No, it's more like 
a snake,' says the second as his hands move over the animal's trunk. 'No, no, you're both wrong,' 
says the third, working his fingers around a leg, 'this creature is a tree!'). 

'You can only understand the system of a rainstorm by contemplating the whole, not any 
individual part of the pattern,' Peter Senge wrote in his acclaimed book The Fifth Discipline. 
'Business and other human endeavours are also systems. ...(and) systems thinking is a 
conceptual framework... (designed) to make full patterns clearer and to help us see how to 

change them more effectively. Mutual reflection. Open and candid conversation. Learning 

to let go. Awareness of how our own actions create the systemic structures that produce our 
problems. Developing these learning capabilities lies at the heart of profound change.' 7 

Happily, an increasing number of governments, people and responsible companies are 
deciding that they no longer wish to pay for the short-term thinking of others - hence an 
increase in the interest of sustainability and responsible business practices. From a managerial 



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Introduction — © The Sustainable Business 2010 



viewpoint this can be seen as either a curse or a blessing not least of which because sustainability 
requires a profound comprehension of a business before even the most basic work can begin. 
Everything within the business (and everything that touches it and is touched by it) needs to be 
examined and understood, which means that everyone the business employs or touches needs 
to work together in collaboration. No one can consider himself or herself too busy. Added to 
this is the old cliche that there is no finish line; sustainability, by its very nature, is an on-going 
process. It must therefore be said that any introductory booklet about sustainability designed to 
function as a primer (like this one) cannot contain all the in-depth coverage of the necessary 
issues and topics that comprise its subject — which is why waste minimisation as an all- 
important first step to sustainability is the main focus of this document. For a more 
comprehensive look at the information presented, please download the free, 377-page 
introductory text titled Managing the New Frontiers on which this guide is based. Managing 
the New Frontiers is distributed as a free PDF file by a number of universities, business 
organisations, and research centres with the aim of helping to strengthen business communities, 
increase employment, and reduce environmental degradation. It is updated at least once a year. 
Visit any of the following websites to obtain a free copy (an updated 2 nd edition will be released 
in the autumn of 2011) - and please encourage your friends and colleagues to do the same. 

- the European Foundation for Management Development (Brussels, Belgium) 
www.efmd.org/publications 

- Kozminski University (Warsaw, Poland) www.kozminski.edu.pl (click on the 
English-language icon) 

- the University of Surrey, Centre for Environmental Strategy (Guilford, UK) www. 
ces-surrey.org.uk (see news') 

- the Birla Institute of Management Technology (New Delhi, India) www.bimtech. 
ac.in 

- the Product Life Institute (Geneva, Switzerland) www.product-life.org (click on 
'major publications') 

- the Global Text Project (USA) http://globaltext.terry.uga.edu/ (The GTP provides 
free textbooks to students - particularly those in developing countries.) 

Additional Reading 

Once you've grasped the basics of sustainability in a micro context, it is recommended that 
you progress to The Performance Economy by Walter R. Stahel to further your understanding of 
the subject in a macro context. The Performance Economy is based on 30 years of work and 
research in the field of sustainability. More to the point, the information it contains has been, 
for quite some time, put to use by a number of companies and governments to great success. 8 



© EFMD www.efmd.org 



PREPARATION 



...the act of making ready (i.e.: putting or setting in order in 
advance of an act or purpose). Before beginning the sustainability 
process it's important to: (1) learn what it entails, (2) articulate 
why the pursuit of it is important, and, (3) establish the 



anayeis c 



employees with enthusiasm, answers, and support. Without this 
foundation, most attempts at sustainability are prone to confusion, 
suspicion, disorganisation, and dwindling motivation - as well as 
wasted time and efforts. 



1. Fundamentals 



When General Electric made the decision in 2004 to become 'greener', many company 
managers were not impressed. By the end of 2008, however, 'green' practices had delivered 
US$100 million in cost savings to the company's bottom line while yielding a portfolio of 80 new 
products and services that generated $17 billion in annual revenues (greenhouse gas emissions 
were reduced by 30% in the process). Going green 'has been 10 times better than I ever 
imagined,' says the company's CEO Jeffery Immelt. 1 

For the most part, what Immelt is talking about is eliminating waste (also known as non- 
product) in all its forms and becoming more innovative in the process - a discovery that reflects 
the company's Six Sigma mantra from the 1980s. Taken as a first step toward sustainability, 
waste minimisation has a lot going for it. It not only increases quality, facilitates innovation, and 
lowers resource and disposal costs, it also reduces pollutants and the expense of pollution (which 
is why environmentalists are so enamoured with the subject). Electricity consumption provides 
a good example. The American EPA estimates that a typical data centre consumes 10 to 100 
times more energy per square metre than the average office building. Yet a 2,300 square-metre 
data centre spending $2.6 million annually for power can still enjoy electricity savings of more 
than 20% per year simply by reducing its energy demands (approximately $1.2 million over a 
four-year period) 2 . A recent IBM study dug even deeper, concluding that less than 4% of the 
energy going into a modern server farm actually processes data. 40% is needed to cool the room 
where the servers are located, another 40% is used to cool the interior of the machines, and over 
16% is used to keep the servers idling in case a sudden increase in processing occurs. 3 This 
means that 96% of the costs of operating a server area are used to perform activities that are 
unrelated to data processing. Moreover, the extra electricity needed results in more coal being 
burned (coal is the most common fuel used to produce electricity), which produces more 
pollution, which results in health and cleanup costs being added to the mix, and so on. The 
problem is exacerbated when one takes into account that up to and over 50% of all the energy 
a business consumes is wasted. Put more succinctly, the more a business wastes the more it 
has to purchase. 

For a growing business, an energy-intensive business, or a business suffering through the 
difficulties of a recession this is clearly not a sustainable path. The good news is that many 
business energy costs can be reduced with long-term sustainable solutions that are so simple 
they defy belief. For example, Yahoo saves 60% of its electricity costs by opening the doors and 
windows where its servers are located and letting the hot air out. Intel states that similar 
efficient air-cooling can cut the power costs of a 10 megawatt data centre by $3 million thereby 
eliminating hundreds of thousands of tons of greenhouse gases and their costly damage. 4 
Suddenly, becoming more sustainable (or going green or whatever it's called - as long as an 
acknowledgement is made that 'green' is just one component of sustainability) doesn't seem like 
such a far-fetched idea after all. 

10 Reasons for a Business to Become Sustainable 
Volatile energy prices 

Between 2004 and 2008, oil prices rose from below $20 to over $145 a barrel. As the world's 
population increases and becomes more affluent, the cost of oil escalates accordingly. Insulated 



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Preparation — © The Sustainable Business 2010 



windows and walls, and efficient machines and equipment are obvious ways to fight higher fuel 
costs, but there are other solutions as well that involve little more than changes in behaviour. 
Firms like UPS are teaching their drivers to reduce left-hand turns, pack trucks tighter with more 
packages and drive fuel-efficient trucks more efficiently. As a result the company has saved 
millions of dollars in petrol and maintenance. 5 Investing in more sustainable energy sources 
(wind, solar, and hydrogen) goes further. For example, the Sierra Nevada Brewing Company in 
Chico, California purchased solar panels that produce 203 kilowatts of electricity to supplement 
a previous purchase of four 250-kilowatt fuel cells. 5 Thanks to rebates, tax credits, and other 
financial incentives, a 100% return-on-investment is expected in six to seven years - after which 
time the company will have few in-house energy costs. More to the point, the company has now 
protected itself from the numerous power-cuts and brownouts that plague its region. Switching 
shipments and deliveries from trucks to trains is another move that slashed the business's 
dependence on oil and saves around $2 million a year 5 - '...- money that can be (and is) used to 
fund additional cost-saving projects.. 

Increases in raw material costs. 

Raw materials are increasing in price for the same reason as oil prices (currently, 20% of the 
world's population uses 80% of the planet's resources). This is somewhat bizarre when one takes 
into account the enormous number of goods that consumers throw away daily, which still 
contain all the materials, labour, and energy that went into making them (in the USA, for 
example, 2.5 million plastic bottles are discarded every hour 1 ). One sustainable solution is 
'extended product life', which turns waste into assets via reuse, remanufacturing, and recycling. 
For example, Stewart's Ice Cream Shops in the USA has been using refillable bottles (over 12 
million annually) in its over 200 shops for more than four decades thereby saving millions of 
dollars a year. 5 Elsewhere, Caterpillar, the world's largest manufacturer of construction 
equipment, delivered years of record profits due to a manufacturing business model that makes 
high-quality components, collects them after they've been used, cleans them up, and re- 
incorporates them into new products at a cost 30%-60% less than making them from scratch. 5 
Many of these parts are made once and sold three times (think of the profit margins involved). 
Meanwhile, Interface Inc., the world's largest manufacturer of commercial carpets has, for 14 
years, been using old carpets to make new carpets instead of sourcing petroleum as a raw 
material. As a result, profits have doubled, employment has almost doubled, and the company's 
stock price increased 550% over a five year period. 5 

Increases in waste and disposal costs. 

Simply put, there aren't enough landfill sites to dump the world's increasing amounts of 
garbage (approximately 2 kilos per person per day and rising 6 ) so prices rise accordingly. For 
example, in the USA, between 1985 and 1995, the average cost of disposing one ton of garbage 
into landfill rose 425% 7 . The bottom line is that throwing stuff away costs money - and the 
bigger the business, the greater the costs. The Sierra Nevada Brewing Company (mentioned 
above) saved $1 million in landfill fees and $2 million in waste haulage fees by finding ways to 
reuse or recycle what it used to throw away 5 . Meanwhile, Wal-Mart has issued an edict to its 
distributors demanding that they reduce their packaging by 5%. As a result, the retail giant 



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Preparation — © The Sustainable Business 2010 



expects to save $3.4 billion a year in waste disposal costs 5 . Another example is 3M. After sifting 
through its waste bins to discover what was being thrown away, the 3M employees developed a 
profitable and recyclable new product made entirely from waste. 5 Now that's sustainability! 

Changes in waste legislation 

Banning wasteful incandescent light bulbs to help lower national energy demands and reduce 
C02 emissions is merely the beginning. Paper, plastic and other recyclable materials are 
increasingly being turned away from landfill sites to avoid waste and encourage recycling. 
Similar waste legislation examples include the USA's Toxics Release Inventory, which some claim 
was America's first intelligent step toward waste legislation, take back laws that make 
manufacturers legally responsible for their products after they've been sold to encourage reuse 
and remanufacturing technologies - and directives such as WEEE (Waste Electric and Electronic 
Equipment), which took effect in 2005 (designed to mitigate the incineration and dumping of 
electronic waste) and RoHS (the Restriction of Hazardous Substances), a 2006 law that bans 
electronic equipment containing certain levels of cadmium, lead, mercury, and other toxic 
substances. Further regulations include the 2007 EUP directive (Energy Using Products), which 
requires producers to design and track products according to closed-loop waste reduction 
practices, and the REACH authorisation (the directive on Registration, Evaluation, and 
Authorisation of Chemicals), which requires manufacturers to publicly display toxicity data and 
to prove that the chemicals used to make products are safe. 5 Additionally, the 2008/98/EU 
directive, which went into effect in December of 2009, categorises waste prevention as a first 
priority, resource reuse as a second priority, and makes material recovery, in almost all its forms, 
mandatory. Rest assured that more such legislation, all of which is designed to mitigate future 
waste problems and expenses, is on the way. 

Increases in environmental laws. 

Digging up the earth and turning it into pollution is not a sustainable business model; it's a 
sign of costly waste. Legislation that classifies C02 as a pollutant merely adds weight to this 
argument (think 'cap and trade'). Company administrators sometimes claim ignorance, but 
astute shareholders know what is at stake. In 2008, for example, the Securities and Exchange 
Commission was petitioned by representatives of seven American states to force companies to 
reveal the actions they are taking to deal with climate change. This was not due to a sudden 
interest in the environment, but rather a belief that investors should have the opportunity to 
'avoid investing in companies that are ignoring the spiralling costs of a changing environment'. 5 
Earlier, in 2007, the CEO's of several corporations called on the American president to enact 
mandatory reductions in carbon emissions. The group consisted of chief executives from Alcoa, 
BP America, Caterpillar, Duke Energy, DuPont, the FPL Group, General Electric, PG & E, PNM 
Resources and others. 'We felt it was better to be in the formative stages of legislation,' said Jim 
Owens, CEO and Chairman of Caterpillar, '(otherwise we) could cost (ourselves) out of the 
market.' By banding together to avoid a patchwork of costly and conflicting regional regulations, 
far-sighted CEO's are trying to work with lawmakers to set goals and targets that allow 
businesses time to make changes and implement solutions that will improve the environment 
and energy efficiency, protect the economy and national trade, and deliver a one- two punch to 



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Preparation — © The Sustainable Business 2010 



waste-filled competitors and products. 5 Added to this is the belief of many scientists that toxin 
build-up in air, soil, and water is more costly and damaging than climate change - which is one 
reason why environmental crimes committed by negligent company directors can now result in 
fines of over $lmillion and jail time of up to ten years. 

Changes in customer demands and expectations. 

'Don't go into business to sell what you want to sell,' I regularly tell my students, 'go into 
business to sell what customers want to buy - and that includes where they want it, how they 
want it, when they want it, and why they want it.' Recently, a major telecom manufacturer 
stated that in 2007, there were 50 request for proposal bids (out of 400) asking for information 
on the company's sustainability initiatives. In 2008, the number was 125, and in 2009 it is on 
track to be over 200. 8 It does not take a rocket scientist to deduce that B2B customers and B2C 
customers want lower costs, fewer toxins, less guilt, more incentives, and less packaging 
associated with the products they buy. Even retailers are watching over their supply chains 
(where most of their environmental footprint is located) in order to reduce unnecessary 
expenses that result from wasteful practices. Energy and material price rises are bad enough, 
but when they are added to supply chains they do even more damage. Firms such as Planet 
Metrics collect information on raw material sourcing, production methods, delivery systems, 
and energy use - indeed all aspects of a product's life cycle - to provide a clearer picture of what 
might happen if oil prices increase, or water becomes scarce, or a law changes, or a higher price is 
placed on C02, and so forth 3 . In other words, it's possible for major buyers to now know ahead 
of time which of the products they purchase are more likely to experience cost increases (or get 
hit by new legislation) - as well as the names of alternative (lower cost) suppliers. If that is not 
enough to scare the hell out of a wasteful business, I don't know what is. 

Competitive advantage. 

During the 2001-2003 recession, global carpet giant Interface faced a 36% worldwide slump 
in carpet sales. Nevertheless the company gained market share during this period because of its 
commitment to low-cost sustainable operations. 9 More recently, the Tennant floor maintenance 
company introduced a commercial floor cleaner that electrically charges tap water to behave like 
a heavy-duty cleaner. 10 The safe, toxin-free result cleans floors better than anything else on the 
market, thereby enabling customers to forego the expenses of purchasing cleaning solvents and 
the cost and time of training employees how to use them. In addition, valuable storage space 
that once held toxic cleaners is now a thing of the past for Tennant's customers. The message 
could not be clearer. Companies that sit on the sustainability sideline may discover that when 
they finally decide to take action their competitors have already passed them by. 

Transparency issues. 

The more secretive a business is the more likely it is to be shunned by customers. Companies 
like outdoor clothing manufacturer Patagonia use transparency to their advantage by making it 
easy for customers to follow products online from conception to the sourcing of materials to 
manufacture and delivery 11 Clorox and SC Johnson take a similar route by posting online lists 
of every ingredient in their products. Business writer and environmental speaker Andrew 

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Winston says it best: transparency comes in two flavours. Voluntary (information donated by 
the company) or involuntary (information donated by a consumer watchdog group or 
disgruntled customers). 3 Guess which one is best for your business? 

The acquisition, retention and motivation of talented employees. 

To be sure, money is important to employees, but there are other things at least some 
employees think about as well. The ability to make a difference, feel a sense of accomplishment, 
work with pride and purpose and other intrinsic motivators can be infinitely more powerful 
than money. Ray Anderson, founder and former CEO of Interface carpets says that nothing 
galvanises his employees more than the company's commitment to sustainability 9 'In the 
competition for the best business school graduates and other high-flyers, especially once the 
economy starts to recover, companies that show they were not mere fair-weather friends of 
sustainability will be at an advantage,' The Economist magazine wrote less than a year ago. 
As if to prove the point, sustainability pioneer Patagonia receives, on average, more than 1,000 
CVs for every job position available. Think about how that minimises talent search and 
recruitment costs. 

The cost of procrastination. 

The longer a business takes to act the higher the cost of change and the further behind it can 
fall in terms of profitability, innovation and market share. Delayed action also ensures that 
additional costs - many of which are hidden - continue to accrue. For example, according to the 
American Environmental Protection Agency (EPA), building-related productivity losses and 
illnesses resulting from poor lighting, poor ventilation, and/or indoor pollution (a.k.a. 'sick 
building syndrome'), cost American businesses $60 billion. 12 And that's just from indoor 
pollution. Further expenses - resulting from outdoor toxins - create unnecessary costs as well. 
For example, the EPA estimates that it will take $1 trillion to clean up America's 
trichloroethylene residues (trichloro ethylene is a toxic substance used to remove grease from 
metal) and that $100 billion is spent in the USA on medical expenses related to polluted air 
alone. Meanwhile, a 2001 survey of nearly 600 children found that perfluorooctanoic acid - a 
substance found in food wrap, Teflon, and stain-resistant fabric coatings - is swirling in the 
blood of 96% of the children it sampled 13 - one of dozens of toxins now found as a matter of 
course in human bodies 14 . Traces of arsenic, mercury and benzene also show up regularly 
alongside heavy metals such as lead, cadmium, zinc, chromium and copper. In river sediments 
and estuaries these substances are ubiquitous. Escalating levels of polycyclic aromatic 
hydrocarbons (PAH's), polychlorinated biphenyls (PCB's), and pesticides (each of which can take 
hundreds of years to degrade) make matters worse. 15 In the interim, residues from billions of 
doses of prescription drugs are now found as a matter of course along shorelines and in 
wetlands. Swallowed to combat cancer, pain, depression, and other ailments, most medications 
do not harmlessly dissolve into patients and disappear. Instead, they exit the body, leak from 
sewage pipes, and work their way into the environment. 16 Researchers in Canada found a dozen 
different toxic drugs in water samples taken from the St. Lawrence River in Quebec, while across 
the border in the USA a vast array of pharmaceuticals (including antibiotics, anti-convulsants, 
mood stabilisers, and sex hormones) were found in the drinking water supplies of 41 million 
Americans. 17 

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Additional Costs that Result from Waste 

Unemployment and underemployment (i.e.: the wasting of people) provide further examples 
of the cost of waste. Expenses associated with laying-off employees (or negative job growth in 
general) include loss of investment in human capital and skills (particularly in individuals that 
have been unemployed for a long time), social and economic deprivation (rises in crime, 
depression, divorce, family break-ups, poor health, 23 lower life expectancy, etc.), and a reduction 
in regional and national economic growth potential (particularly from the one- two punch of 
fewer tax revenues and increased government spending designed to spur growth). When 
poverty is added to the mix these problems only intensify. 

Stuart Hart, author of Capitalism at the Crossroads 18 and a pioneer in the field of 'Inclusive 
Commerce' has discovered that most business strategies focus exclusively on the 800 million or 
so people that makeup the industrial world while effectively ignoring the 4 billion to 5 billion 
people that comprise the bottom of the economic pyramid. Contrary to popular belief, the 
world's poorest countries have had zero or negative economic growth since the early 1980s 19 and 
the years between 1990 and 1999 mark the slowest growing decade the world economy has seen 
in the past 40 years 20 . Of particular concern are the approximately one billion people that live 
on $1 a day or less, the 16,000 children that die daily from malnutrition and the fact that the 
number of people suffering from chronic malnutrition has almost doubled since 1970. 
Meanwhile, in the world's poorest regions (areas like sub-Saharan Africa) $25,000 is spent every 
minute servicing the debt owed to rich countries. Today, the World Bank estimates that the 
developing world spends around $13 in debt repayment for every $1 it receives in grants. 21 
Clearly, this is not a sustainable path. 

Connecting the Dots 

We know what happens when the world and its businesses are run in an unsustainable 
manner. The ten year period between 2000 and 2010 has been described as the 'most dispiriting 
and disillusioning decade in the post WWII era'. 22 The millennium began with a dotcom bust 
and a Wall Street crash, both of which were overshadowed by major terrorist attacks. In the 
years that followed the numbers of large-scale terrorist bombings increased.. Then came the 
worldwide financial meltdown of 2008 brought about by irresponsible deregulation and 
monetary policies. Large swathes of the globe are now beset with high unemployment, huge 
amounts of debt, and growing unrest. An increase in catastrophic storms, floods, and droughts 
- and the increasing acidification of the world's oceans - merely adds to overall costs and malaise 
as well as a profound feeling that humanity is moving in the wrong direction. Furthermore, 
potable water is now at such a critical low level that wars over this crucial commodity are 
predicted to break out within 10 to 20 years while the Earth's resources (of which there are finite 
supplies) continue to be captured, abused, concentrated to industrial (toxic) levels and discarded 
at an alarming rate. 

We have seen the enemy,' said Walt Kelly's satirical character Pogo, 'and he is us.' 

There is a better way. It is possible to abandon the costly, cancerous actions that constitute 
short-term thinking. It is possible to do more with less, obtain more from purchases and 
investments, reuse industrial inputs and outputs and minimise future problems and expenses. 



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To be sure, sustainable business practices will not solve all of the world's ills — the complex, 
multi-dimensional configuration of sustainability ensures that there is no silver bullet that can 
be relied upon to hit every target. Equally as true is that no known business on Earth can call 
itself 100% sustainable (those that are interested are, for the most part, merely experimenting 
with the concept). That being said, minimising waste, thinking whole-system and acting in the 
long-term is a big step in the right direction. Businesses in the manufacturing, retail, financial 
and service sectors are benefitting in astonishing ways. If you wish to take part in this 
phenomenon (to paraphrase Mahatma Gandhi) you will have to be the change you want to see 
in your business. Translation: clean your own house first. Let your competitors spend their 
money on lawyers and lobbyists. Rather than make excuses and continue with delays, a growing 
amount of business data strongly indicates that long-term thinking is a profitable way forward. 



The areas where sustainability leads 



Product Quality Improvement 



Basic Human Need Fulfilment 
(job creation, employee pride, 
meeting customer demands...) 



Loss and Waste Prevention 
(reducing present and future costs) 

Sustainability: a 3-Dimensional issue 




Resource Use Optimisation 
(including raw materials and labour) 



Environ nental Hannonisation 



Product -Life Enhancement 
(increasing profit potential) 



Performance (Optimisation 
(people, products, and processes 
do what they're designed to do) 



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2. What the reformer is up against 



With large corporations saving more than $1 billion from sustainable practices - and 
countless smaller businesses adding tens of thousands of dollars a year (or more) to their 
bottom lines by doing the same - one would think that businesses around the world would be 
rushing to become more sustainable. Unfortunately, this is not the case - and a major reason 
why this appears to be so lies within the complexity of the human brain. 

The Center for Research on Environmental Decisions (CRED) is a research organisation based 
at Columbia University. For the past several years, scientists at CRED have been working to 
understand the mental processes that shape human choices, behaviours and attitudes. 
Understanding why people behave differently when presented with simple choices is a field of 
study located at the crossroads of psychology and economics, which sprang from the work of 
Nobel Prize-winning psychologist Daniel Kahneman and his colleague Amos Tversky, both of 
whom discovered that humans often carry a number of biases that greatly affect decision- 
making. 1 For example, we are generally more averse to losses than gains and we repeatedly use 
short-cuts to solve problems (a process called heuristics). Moreover, most of us have an inert 
dislike of delayed benefits. Placed in an everyday context, this means that given a choice we will 
more often take €20 now as opposed to waiting a year to collect €100. 



Between 1513 and 1532, Niccola Machiavelli, author of 
The Prince, wrote, 'There is nothing more difficult to carry 
out, nor more doubtful of success, nor more dangerous to 
handle, than to initiate a new order of things. For the 
reformer has enemies in all those who profit from the old 
order, and only lukewarm defenders in those who would profit 
from the new order - the lukewarmness arising partly from 
fear of adversaries who have the laws in their favour, and 
partly from the incredulity of mankind who do not believe in 
anything new unless they have had actual experience of it. 



People are also extremely susceptible to how questions are posed. For example, would you 
adopt cost-free procedures that resulted in your company saving €29,000 annually - or - would 
you adopt cost-free procedures that cut carbon emissions by 139,000 kilos per year? The result 
(from turning off unneeded lights in a business one of my students examined) in both cases is 
the same, yet depending on who is being questioned, the answers vary considerably. 



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Further examples of biases that affect human decision-making processes include: 

- A finite pool of worry - being able to focus on only a limited number of problems at any 
given time. 

- Single-action bias - the belief that performing one act or task is enough to solve a 
complex problem. 

- Focusing more on what is unknown rather than what is known - for example, endlessly 
debating the exact amount of money that a sustainable procedure will save (€200,000 or 
€500,000) rather than the fact that the procedure will save more than it costs. 

- The expectation bias - making a judgement based on what the outcome is expected to be 
(or, as Henry Ford is credited with saying, 'Whether you believe you can or believe you 
can't, you're absolutely right.') 

- The anchoring bias - the belief that things are as they appear to be, or, as they have been 
taught (in other words, an individual's powers of estimation, frequencies, probability, and 
sizes are heavily influenced by his or her surroundings, background, and education [this 
helps explain why people are incensed by flag-burning or the kind of sex others have in 
private, even though these issues don't really affect them — yet when an issue like toxin 
build-up comes along, which does affect them, their reaction is negligible). 2 

Compounding these biases are a number of additional short-comings that influence 
behaviour including poor communication skills (especially those of scientists, academics, 
managers, and teachers), prevention avoidance (e.g.: only being able to defuse a bomb after it 
has exploded), and the constant misinformation spread by moneyed interests, sceptics, or 
out-and-out liars (a situation exasperated by a common perplexing belief that the truth is 
whatever anyone says loudly or fervently enough). 

Mixed messages, as well as messages expressed in ways that motivate the messenger more 
than the receiver, create additional obstacles to long-term thinking - and a quick search through 
the proliferation of websites promoting green business practices provides a case in point. Many 
of these sites earnestly document the amount of greenhouse gas emissions a company can 
eliminate in a bid to become 'greener', but all-too-often there is little or no mention of the 
financial savings that will be achieved in the process. This is puzzling for the simple reason that 
finance is the language of business - not C02 emissions. Is it any wonder so many businesses 
are not interested in sustainability? 

Manifestations 

How do the above biases and shortcomings manifest themselves in academic institutions and 
work places? Usually in the following ways 4 : 

- Lack of Awareness: Without question, ignorance is the greatest enemy of sustainability. 
Most people simply do not know about the cost of waste, the money that can be saved by 
reducing it, the numerous negative situations that can be alleviated by eliminating it and 
the myriad solutions that can turn it into money. Just as important, most people never 
consider that pollution and over-production are among the easiest signs of waste to spot. 
(For example 3M's 'Pollution Prevention Pays' programme saved the company more than 

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$1 billion over a 30-year period). Added to this is the common misconception that just 
because a system, machine, or product is functioning, it is operating at 100% efficiency or 
that traditionally low-end costs (such as water and electricity) don't amount to much and 
are therefore not worth examining - neither of which is true. 

Waste Acceptance: Some people believe that waste is a natural and acceptable part of 
business. Common variations of this theme include defeatism (saying sustainability is not 
worth the effort) or the belief that sustainability does not apply in (our) part of the 
company or in (our) industry. As harsh as it sounds, the more short-term a person's 
thinking is, the more likely it is that he or she will feel this way. 

The Cost Myth: 'How much is this going to cost me?' is the first question managers usually 
ask when the basics of sustainability are explained - and the question is often put forth in 
a pessimistic tone implying that the cost will be too high. Unfortunately, it misses the 
point. It is not the costs, but the savings and potential profits that should be considered 
first. Yes, in many cases some capital is required to start a sustainable process, but the 
point of sustainability is that it can pay for itself - with the added benefit of additional 
savings year after year that can be used to fund further improvements. Energy efficient 
light bulbs provide a good example. Efficient bulbs can cost anywhere from $6 to $20 (or 
more) per unit whereas regular light bulbs cost around 75-cents (or more) per unit. Most 
folks assume that 75-cent bulbs are the less expensive option, yet if one takes into account 
that energy efficient bulbs last years longer and can save $30 - $60 in electricity costs over 
the life of the bulb, the 'cheaper' bulb becomes the more expensive alternative. 
Unfortunately, too many people do not think in the long-term and end up choosing the 
more expensive option. This is especially true with 'stranded capital' (businesses that 
invest millions of dollars in inefficient equipment and machinery and cannot afford 
to change). 

The Dimes-not-Dollars Argument: Those who have looked into efficiency sometimes find 
it difficult to become enthusiastic because they assume it only leads to small-time savings. 
Most of the businesses my students assess, for example, initially scoff at the notion that 
they can save money by implementing basic efficiency procedures - until estimates show 
that many of them can save thousands of dollars per year just by turning their lights and 
computers off when not in use. In several cases we revealed that annual savings of up to 
and over half-a-million dollars could be obtained by incorporating a few more inexpensive 
(and risk-free) solutions. The moral of the story is that the savings from efficiency do not 
just add up - they tend to multiply. For example, to continue with the light bulb example 
above, the overall savings from installing energy-efficient light bulbs includes: (1) reduced 
electricity costs (efficient bulbs consume less electricity), (2) reduced replacement bulb 
costs (efficient bulbs last longer), (3) lower cooling costs (heat from inefficient light bulbs 
can increase a building's heat load by 30%), (4) a reduction in air-conditioning needs (with 
heat levels cut by 30%, a smaller, less expensive air-conditioning system is needed), (5) 
reduced HVAC energy requirements (smaller air-conditioning systems require less 
electricity), and so on. 

The Hassle Factor: Many people don't want to add more work to their day no matter how 



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much time or money they can save. The message to remember here is that sustainability is 
not about sacrifice. It is about eliminating wasteful practices and replacing them with 
more cost-effective alternatives that make work easier, more enjoyable and less expensive. 

Scepticism and/or Obstinacy: In a world where prices are regularly taken into account, but 
long-term value rarely is, sustainability is a difficult concept for many people to accept. 
Sceptics, for example, often think that the amount of cost-savings a business can achieve 
are impossible to prove (especially if no measurement is taking place). Estimations 
therefore become easy to dismiss with an unmovable conviction that the amount of time 
and money invested will be more than what is received in return. Stated differently, since 
much of sustainability falls into the realm of prevention, and the predicted savings from 
most preventative measures cannot be proven until after a practice has been implemented, 
predictions become easy to ignore. 

Social Loafing: Almost every business or industry has within its ranks those who reduce 
their efforts when they see that others are more than pulling their own weight. This 
practice is called social loafing and it is anathema to sustainability - particularly when the 
lowered input of one or two individuals has the ability to reduce the work or aspirations of 
an entire operation (or industry). Social loafing tends to be pervasive in under-regulated 
industries and/or in companies that have untrained or unsupervised employees. As a 
result, since employees feel that the company (or industry) that employs them does not 
care about costs - why should they? 

'Let's Wait and See': Businesses (or managers) that wait to see how other companies react 
first before they themselves take action probably suffer from a lack of education, direction, 
and training. Ironically, because of the virtually risk-free nature of efficiency and the rapid 
financial improvements it brings about, when a decision to become more efficient is finally 
made those that sat on the sidelines may discover that their competitors have already 
passed them by. 

The Solutions are Too Simple: A British efficiency consultant in France once relayed to me 
that almost every manager he spoke with about sustainability rolled his or her eyes when 
the first suggestion he made was to turn off unneeded lights (this practice alone saved one 
factory that my students assessed €28,800 a year). Although there is no data to suggest 
that complexity legitimises business solutions, many people apparently seem to need the 
false reassurance that they feel complexity provides. Therefore, because many sustainable 
solutions are simple and low- tech, they are rejected out of hand. 

'We're Already Doing as Much as We Can: These self-deceiving words are usually uttered by 
managers and employees who: (1) mistakenly believe that they've done it all, or, (2) wish 
to avoid additional work, or, (3) are placating customers, their shareholders, or the media 
with false information. According to the Scottish Environmental Protection Agency, the 
true cost of a business 's waste is often five to 20 times more than what the business 
assumes. Think about that for a moment. An office manager once told my students that it 
was highly doubtful they could find more than $300 in efficiency savings (We're already 
efficient,' she said). The students found over six times that amount in two hours. Another 



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group of students found over $4,000 in savings in a restaurant, which claimed beforehand 
that it too was as waste-free as it could be thanks to the policies set by its head office. 
Managers and employees take note: proclaiming that your business is as good as it's going 
to get is tantamount to claiming that it has no further need of new thinking, training, 
input, or ideas. 

- Group Think or a 'Committee Mentality' results when laziness or the smug air of 
superiority creeps into a business and it refuses to consider what it feels are strange or 
different viewpoints from others. For example, students I have trained to conduct waste 
evaluations have been called 'tree-huggers', 'crackpots', and a host of other names when 
they mention that sustainability also helps the environment by dramatically lowering 
greenhouse gases. This type of behaviour is mostly a hangover from the 1970s when 
businesses and environmentalists clashed (sometimes physically) on a regular basis. 

- Additional Obstacles include: fear of change, lack of leadership, an inability to accept 
criticism, poor management and poor decision making- all of which will be 
examined later. 

The Illusion of Control 

Humans often have a strong desire to feel in control - so much so that acquiring a feeling of 
control is usually deemed essential for survival. Psychologist Bruno Bettelheim concluded (from 
first-hand experience) that survival in Nazi death camps depended on a person's ability to 
preserve areas of independent action and to maintain some control over certain aspects of one's 
life. Eliminate control and people experience depression, stress, and even the onset of disease. 3 
In an academic study of elderly nursing home residents, for example, a group of individuals was 
told that it could decide how their rooms were decorated and that each person had a choice over 
what type of plant he or she could have (the subjects were also told that they were responsible 
for caring for the plant). A second group had everything done for them. Eighteen months later, 
15% of the subjects in the first group had died compared with 30% in the second group.4 

Although research shows that satisfying the human need for control can create a powerful 
sense of purpose and direction, the irony is that too much control can generate problems. Few 
people enjoy the company of control freaks, for instance, and having one person in a group (or 
business) make every decision often results in the group being vulnerable to bad choices - 
particularly when it comes to money. Studies have shown, for example, that people feel more 
confident when they toss a set of dice rather than if someone else makes the toss for them. 5 
Most people will also value a lottery ticket more if they choose it rather than if one is chosen for 
them at random. 6 A similar study revealed that well-educated subjects actually thought that 
they could improve their prediction of coin tosses through practice. 7 Obviously, in all of these 
examples the subjects had no control over the outcomes of the acts described, yet as 
psychologist Leonard Mlodinow reports, 3 on a deep, subconscious level they must have felt they 
had some control because they behaved as if they did. The conclusion is that sometimes a false 
sense of control can promote a false sense of well-being by allowing an individual to maintain 
the hope that a bad situation can be improved. 

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So what, you may ask, does a false sense of well-being (i.e.: the illusion 
of control) have to do with sustainability? 

In the introduction it states that sustainability embraces the legal, financial, economic, 
industrial, social, behavioural, and environmental, arenas - and most of the examples provided 
in this publication offer proof that this is so. Now take a minute to thumb through this guide 
while asking yourself the following question: how much control does the business in which I 
work have over these issues? 

Battling the Illusion of Control 

Because of the enormous breadth and depth of sustainability - and because too many people 
believe (or want to believe) that the issues comprising sustainability are distant both in time and 
place - the astute manager has his or her work cut out trying to implement sustainable practices 
in the workplace. Over the past few years it has become fashionable to describe the kind of 
focused, collaboration-induced communication needed to break through these barriers as having 
the proper frame, explains Jon Gertner, author of the article Why Isn't the Brain Green? 1 , 
however, in our haste to mix jargon into everyday conversation, frames are sometimes confused 
with another psychological term, 'nudges'. 

Frames and nudges are powerful tools that help mitigate biases, reduce individual 
shortcomings and clarify mixed messages. A frame is a method used to get people to behave or 
think a certain way by using sophisticated messages that resonate or take advantage of cognitive 
biases (such as placing a message in a financial context rather than an environmental context). 
Nudges, on the other hand, direct the intended recipients toward a preferred action and are 
designed to follow frames by structuring choices so that cognitive shortcomings do not drive 
desired actions off course. 

For example, if a business has been told that it can save €2,000,000 in costs by reducing 
wasted electricity (the frame), a nudge that can encourage employees to reduce those costs could 
take the form of an electricity monitor displayed so that every employee can see how much 
electricity is being used or wasted in real time. Nudges therefore appeal to the human need for 
short-term satisfaction as well as the desire to be rewarded for improvement. So, placed in a 
management context, a 'frame' is the ability to communicate a message to others in a way that 
they understand and a 'nudge' refers to the feedback and measurement that enables the targeted 
group to see if their actions are achieving desired results. 

Establishing a Resonating Frame for Businesses 

To date, in an on-going survey, my students have asked 127 business managers and 530 
employees in eight countries (Belarus, Canada, China, Peru, Poland, Russia, the United Arab 
Emirates and the United States) what aspects of sustainability most interest them. Top ratings 
are almost always given to: the cost savings involved, profit potential, market share increases, 
and job security (i.e.: the financial aspects of sustainability). Environment concerns are usually 
ranked least important - often by margins of 8 to 1. Why then, when trying to win over 
businesspeople, are the aspects of sustainability that appeal most to business constantly forced 
to take a back seat to environmental facts and figures? 



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The Importance of Collaboration 

Apart from frames and nudges, group collaboration (i.e.: the input of employees as well as 
different departments, customers, suppliers, and so on) appears to be another key component to 
achieving success when sustainability-based changes are introduced into a business. Why? 
Because when an individual is reminded that he or she is part of a group, the group tends to 
become the decision-making unit - and groups are often more patient than individuals, 
especially when considering long-term or delayed benefits. Equally as important is that armed 
with good information, the freedom to speak out, and strong leadership, the calibre of group 
work can usually be expected to exceed the sum of that which each individual could normally 
produce on his or her own. Experiments conducted at the CRED research centre, for example, 
show that giving subjects a blue sticker and telling them they are on the 'blue-star team' 
increases cooperation from 35% to 50%. Just seating the 'team' together at a table increases 
participation rates by 75%. 18 These outcomes suggest that collaboration can be used to set 
long-term sustainable goals before individual biases and misinformation have the chance to set 
in - which is important because, as the next section reveals, setting clear, understandable goals 
and objectives that everyone can agree on is a cornerstone of the sustainability process. 



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3. Establishing Sustainability as an Objective 

Not long ago, an administrator at a prominent UK business school pulled me aside and 
explained that her university had just bought a hybrid car (coloured green, of course) and had 
painted the words '(Our) university is going green!' on its side. 'What will the car be used for?' I 
asked. "That decision hasn't been made yet,' she replied. 'Who'll be driving this car?' I 
responded. 'We haven't figured that out yet either,' she answered, 'but we're really serious about 
this sustainability thing so we're also going to knock down two of our buildings and rebuild 
them so they're greener.' 

Obviously something is wrong here. Few grandparents try to connect with their teenage 
grandchildren by using 'gangsta' hand gestures, saying things like 'peace out', and wearing 
snorkel jackets and trousers that hang down around their knees. Yet too many business schools 
(and businesses) fail to see a similar sense of irony when they announce that they're 'going 
green' - with the result that their efforts end up looking like nothing more than a misplaced 
marketing exercise. Put another way, it is probably not in the best interest of a business or 
business school to tackle the subject of sustainability from its weakest point (environmentalism) 
- particularly when a wealth of other vitally important long-term thinking skills and abilities are 
well within its grasp. 

The Role of the Astute Manager 

For the past five years, companies considered to have good social, environmental and 
governance policies have outperformed the MSCI world index of stocks by 25%. Indeed, it has 
been shown that 72% of companies that adopt sustainable policies regularly outperform their 
industry peers. 6 What this suggests is that if sustainable practices are a proven way to improve 
business operations they should be strongly considered - and since the role of a manager is to 
serve customers 1 (see FIGURE 3-1, The Two Choice of Management) perhaps the best way to 
implement sustainability is through service. Serving external customers (paying customers) 
involves finding out what they want - as well as how, when, and where they want it - and then 
moving heaven and earth to provide it (see section 12: Understanding the Importance of 
Customers). Serving internal customers (employees, colleagues, suppliers, contractors, 
shareholders and other stakeholders) includes finding good people, educating (training) them, 
and giving them what they need so that they know the needs of the business, the business 
knows their requirements, and the two can serve each other. Any other decision on the part of 
the manager merely serves the manager (in a nod to the Four Horseman of the Apocalypse, I 
refer to the four major managerial weaknesses depicted in FIGURE 3-1 as 'the Four Horseman of 
the Managerial Psyche'). For example, if an employee approaches a manager with a sustainable 
cost-saving idea and the manager says 'no', the manager is probably serving his or her ego (few 
words show that a manager has superiority over a subordinate than the word 'no'). If the 
manager says 'no' because he or she is not sure if the idea will work, insecurity is perhaps to 
blame (a manager's job is to find out how or if new ideas will work). If the manager says 'no' 
because implementing the idea will involve additional work (as new practices often do in their 
initial stages), the manager is probably serving his or her incompetence. Lastly, if the manager 
says 'no' because he or she is just being stubborn, or, the idea will allow someone else to shine, 
the manager's greed (or selfishness) is most probably being served. 



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Figure 3-1 

Scott's "Two Choices of Managent" 

© 2008 Jonathan T Scott 



-► 



First Choice: Serve Customers 



-► 



External Customers 

(paying customers) 

Internal Customers 

i employees, suppliers, stakeholders... 



) 



End result: Serving the Business 



Ego 



Second Choice: Serve the Manager 



-► Insecurity 
-► Incompetence 



-► Greed 



) 



End result: Serving the Manager 



Sustainability: Make It an On-Going Mission and Make It Known 

A common refrain heard from employees and managers in many organisations is that they 
don't know the aims of the company in which they work and they have never been taught their 
employer's values and priorities (if they have any) - a situation that usually boils down to a lack 
of communication. Poor communication results in employees not performing to the utmost of 
their ability and the organisation as a whole not pulling in one direction. Simply put, people 
work better (1) when they know exactly what it is they're supposed to be doing, (2) when they've 
been told (and have accepted) what is expected of them, and, (3) they're provided with regular 
real-time feedback. 2 

Ensuring that Proper Goals and Objectives are Established 

When establishing its sustainability objectives, Dow Chemical could boast support from the 
company's CEO as well as shop floor workers, clients, suppliers and environmentalists'. 
Excluding input from any one of these groups was seen as asking for trouble - something the 
Monsanto corporation discovered only too well during the 1990s. Around this time, Monsanto 
developed a bold new vision of providing sustainable agricultural products that could resist pests 
and diseases without the use of chemicals. The company's objective was to aid the environment 
and provide a level playing field for poor farmers around the world who could not afford the 
latest fertilisers and pesticides and other high-end technologies. This seemed to be an admirable 
objective from the viewpoint of business administrators, however, the company started 
developing genetically modified seeds to achieve its aims without first asking its customers what 
they thought about this plan. The resulting violent reaction against Monsanto and its 
genetically modified products shook the GM industry to the core, caused the company's stock 
price to collapse, forced its CEO to step down, and ended with the company being merged with 

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another. In other words, by giving its customers what it thought they wanted instead of asking 
what they actually wanted, Monsanto set off in the wrong direction and paid a heavy price 
for it. 4 

Four Steps to Achieving Optimal Objectives 

1: Create a Vision 

A vision is a clear and vivid idea of how things should be. In the UK, HSBC Holdings PLC 
decided to motivate its external and internal customers with a vision of reducing waste by 
becoming carbon neutral. Reckitt Benckiser, a British manufacturer of household goods has 
developed similar plans. In the USA, the Bradley Corporation, a manufacturer of commercial 
washroom fixtures, proclaimed a comparable vision which led to its products becoming 
'environmental solutions instead of environmental problems'. 5 Computer maker Dell Inc. has 
announced that it is committed to becoming the greenest technology company on the planet. 
Organisations like these have discovered through research and close client relationships that a 
commitment to sustainability not only reduces waste, pollutants, and costs, it also promotes 
responsibility and respect - attributes that attract the attention of customers and help create an 
inspiring vision for employees to fulfill. 

2: Decide on a Mission 

Mission statements individualise a business by defining its purpose and uniqueness. For 
example, ST Microelectronics pledged to obtain a forty-fold increase in production and become 
virtually waste-free (in terms of greenhouse gas emissions) by 2010. Figuring out how to do this 
took the company from being the 12th-largest microchip manufacturer in the world to the 6th 
- while saving a billion dollars in the process. 6 Meanwhile, Ben & Jerry's Ice Cream declares as 
its mission a dedication 'to make, distribute, and sell the finest all-natural ice cream... (with) a 
'continued commitment to incorporate wholesome, natural ingredients and promote business 
practices that respect the Earth and its environment.' 

3: Break the Mission Statement Down into Achievable Objectives 

Objectives are blueprints for achieving a mission that incorporate concepts of time and 
measurement, address financial and non-financial issues and are more concrete and action- 
oriented. For example, sustainable carpet manufacturer Interface jump-started its employees by 
setting the following objectives and then asking everyone how to achieve them: 

1. To drive waste out of the company completely, 

2. To emit only benign emissions, 

3. To harvest old carpets into new carpets rather than use virgin raw materials, 

4. To only utilise renewable energy in production processes, 

5. To transport products from the factory to customers as efficiently and cleanly as possible, 

6. To sensitise people and communities about sustainable practices, and, 

7. To reinvent commerce itself using improved leasing services. 7 

4: Formulate Strategies to Achieve Objectives 

The final stage of the objective process is to identify short-term goals for unit, departmental, 
or individual use, along with timelines to avoid procrastination as well as forms of measurement 



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to ensure that progress is being made (e.g.: the production department will reduce waste by 60% 
in nine months and energy consumption by 25% in three months...). Methods for achievement 
can include providing better employee training, replacing raw materials with recyclable 
materials, investing in clean energy, replacing outdated equipment and machinery with efficient 
alternatives, redesigning products and so on. Tapping into the workforce is essential because 
involving employees yields ideas and solutions and builds motivation and commitment. For 
example, on the 4 th of May 2004, the Subaru car manufacturing factory in Lafayette, Indiana 
made history by becoming the first auto assembly plant in North America to become waste-free 
thanks to the on-going commitment and input of workers and managers. 100% of the waste 
steel, plastic and other materials coming out of the plant are now reused or recycled. Even paint 
sludge is dried to a powder and shipped to a plastics manufacturer where it ends up as parking 
lot bumpers and guardrails. What can't be reused - about 3% of the plant's trash - is incinerated 
to generate electricity. 8 In another example, a Kozminski University student in Warsaw, Poland 
who was assessing a business approached a worker and asked him if he had any ideas that would 
improve efficiency. The worker suggested moving two machines closer together so that one 
person could operate them both, thereby freeing up a second worker to focus on other tasks. 
Hearing this, the shop foreman expressed surprise that the worker hadn't spoken up earlier. 'No 
one asked me earlier,' the worker replied. 10 

Putting It All Together: Frames, Nudges, Objectives, and Control 

For a manager interested in 'selling' sustainability to colleagues, success or failure often 
hinges on an ability to speak the language of the people being addressed. This is the world of 
selling, where putting the needs and interests of customers ahead of one's own is considered by 
many pros to be the most winning of strategies. The key to successful selling lies in 
understanding customers and their motivation. Two factors are involved. The first is moving 
toward a goal or reward. The second is moving away from a fear or loss. According to sales guru 
Tony Parinello, if you can work out which one of these motivates your customers (or can figure 
out how both of them can), you're on your way to making a sale. 9 Don't assume that merely 
talking about financial savings and profit increases will win a financially-minded audience over 
to sustainability. Yes, this type of information can be made interesting and intriguing, however, 
it doesn't always instigate action - and action (e.g.: approval, the granting of authority, and, 
funding) is what most managers are after. Before pitching any proposal, it is imperative that 
research is done beforehand to identify a specific problem the audience faces. Once that 
information is known a proposal can be tailored to show how it will help the audience as well as 
those who have the power to act. For example, if a seller is pitching first-aid kits to a factory, 
rather than explaining the low cost of the kits, the advanced materials the kits contain, the lives 
they've saved, or the design awards they've won, it would be in the seller's best interest to first 
find out the most common injuries suffered by employees in the factory. In a chemical factory 
where employees are prone to burns this information could then be used the following way in a 
sales pitch: 'Studies show that, thanks to our first aid kits, chemical burn scars are reduced by 
63% and pain is reduced by up to 80%. Furthermore, by having our kits on your premises, your 
insurance premiums can be lowered by up to 14% and your company will save an additional 
$2,000 per year because of the current discount we're offering. Our kits, and the support 



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system behind them, will even help you sail through your next health and safety inspection.' 

This type of approach helps the seller target three objectives. (1) It gets the customer 
emotionally connected to the product or idea, (2) it targets the real problems of the customer 
with real solutions, and, (3) it shows the customer what is at risk by not implementing the idea. 
In other words, in one fell swoop it shows how the customer can (a) move closer toward a goal or 
reward and, (b) move away from a fear or loss. 9 In a sustainability setting this could mean 
explaining how the $25,000 that can be shaved from the business's yearly electricity bills would 
be used to pay the wages of a part-time worker needed in a production department. $40,000 in 
fuel savings can be pitched as a perfect way to purchase new computers. If the shipping 
department needs a new vehicle or operations is desperate for a more advanced extrusion 
machine, the $82,000 a year saved by incorporating sustainable waste recovery practices could 
be explained as a no-capital, non-risk way to begin paying for what is needed. Likewise, if the 
region, state, or country is poised to adopt new environmental legislation that might cost the 
company a fortune, show how taking action now will save $125,000 and reduce carbon 
emissions by 30,000 tons over the next five years. Proposals presented this way are difficult 
to ignore. 

One More Time 

In 2005, employees at Hewlett Packard managed to keep 84% of the company's trash out of 
landfills around the world as part of the business's sustainability drive. At Xerox, a company 
that credits sustainable activities as having helped save it from financial collapse, employees 
reuse, reman ufacture and recycle over 90% of company waste. Workers at three of Toyota's 
manufacturing plants in the United States have reached a 95% recycling level - as have the 
employees at Fetzer Vineyards, one of America's largest wine makers. 8 The point here is that 
sustainable waste-minimisation practices mesh beautifully with the fundamentals of business: 
to serve the needs of customers, to reduce costs, and to streamline the business toward making 
a sale (not to mention the protection and creation of jobs). To be sure, the examples mentioned 
in this and other sections represent only a fraction of the overall sustainability picture - and it is 
important to note that sustainability is like quality in that one sub-par or out-of-sync 
component often diminishes the entire end result. Staying on track involves acknowledging the 
big picture by continuously honing and developing an awareness of what sustainability 
encompasses (understanding the interplay of every component - see FIGURE 3-2) before 
analytic thought, personal interests, negative experiences and biases begin their reductive work. 
Equally as true is that after a few goals have been achieved it is tempting to believe that these 
successes possess an independence all their own and to rest in them and believe that they are 
the foundation of what is being sought. This is the time to note that a pledge to sustainability is 
a pledge to on-going improvements across the board along with complete acknowledgement that 
there is always room for improvement. 



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Figure 3-2 

Sustainability in your business (connecting the dots) 



Preservation 




Preparation 



Waste Elimination 

(the path to sustainability) 

x \ 

Production Product 



Preservation 



Preparation 




Place 



Production 



Product 



Waste elimination: going from fragmented, scattershot operations that foster an 'It's not myjob', 'That's not my area', or 
'I don't know' attitude to a responsible mindset that promotes long-term, whole-system, 3-dimensional unity and stability 7 



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PRESERVATION 



Preservation is denned as: 

- the process of keeping something in existence, 



2 or sates 



- keeping possession of, or retaining, what currently exists. 

Any way it's looked at, preservation is not about standing still. In a 
business context, sustainability demands that two forms of preservation 
take place. The first is internal and involves the collection and analysis 
of real-time measurement in production processes and product use. 
The second form is external and includes keeping ahead of laws and 
legislation, industry improvements, directives from customers 
(e.g.: 'scorecards' insisting that packaging or toxins be reduced), 
disruptive trends, and other forms of change. 



30 



4. Mapping the Waste-Elimination Process 

Trying to eliminate waste in an organisation without first conducting some form of 
reconnaissance is comparable to hacking one's way through a jungle without a map. 1 
Put another way (as one practitioner explained it), without in-depth knowledge of what you're 
looking at and what you want to do, trying to find wasteful practices is akin to wandering 
around in circles pointing out superficialities. For this reason, a number of efficiency experts 
advocate creating a process map (also known as a process flow chart) to help lay the 
application foundation. 1 

Almost any production setup or work process in any organisational setting will benefit from 
being mapped including service businesses, factory assembly lines, farms, offices, schools and 
food production. When done correctly, a process map usually reveals astonishing facts and 
figures about consumption and waste, including: 

- Raw materials (including the amounts of whatever is needed to collect, process, and 
ship them), 

- Manufacturing processes (including manpower needs, material use, energy use, and 
waste creation), 

- Packaging requirements (the amount of paper, plastic, styrofoam and other materials 
being consumed), 

- Transportation needs (the amount of energy used to shift materials from one place 
to another), 

- Maintenance (the chemicals, energy, and water needed to use, maintain, and/or clean 
whatever is being produced), and, 

- Use and Disposal methods (a description of how the product is thrown away as well as the 
costs involved). 2 

Because gathering and mapping an organisation's production activities requires effort and 
usually involves more than originally envisioned, obtaining the input of the many different 
people involved in the activities being examined is crucial. Henri Miller, a famous American 
painter and novelist, once said that in this age, which believes that there is a shortcut to 
everything, the greatest lesson to be learned is that the most difficult way is, in the long run, 
usually the easiest. Keep Miller's words in mind when mapping a work process. 

Laying the Groundwork 

Don't worry if you or your employees have no experience putting together a process map. 
Practice makes perfect. Experienced practitioners suggest using post-it notes to start the 
process. Displaying work processes on post-it notes and rearranging them on a big board makes 
it easy to move and add new information. Again, remember to obtain input from as many 
people as possible. You are bound to miss something if you go it alone. FIGURE 4.1 (below) 
shows how a mapping process can start: 

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Figure 4.1 

Overview of a seven stage manufacturing process 

© 2008 Jonathan T Scott 



> 



Receiving of raw materials „ , . , 

° m of the raw materials 



Handling and storage Machining 



(making the product) 



Once the overview has been laid out, the subtasks in each stage can be identified and listed 



/ / 



Storing the 



Storage or shipping Packaging the product fi ■ 1 a a Refining the product 

Analysing Every Stage of Production 

After every stage of production has been laid out, the next phase is to break the stages down 
into subtasks for further analysis. List and describe every activity in the order that it occurs. 
Examine how these activities impact one another and measure and record the amount and costs 
of every production unit input and output (see FIGURE 4.2). Measuring and recording all 
inputs and outputs includes weighing or counting (in terms of units or financial amounts) how 
much is consumed as well as how much is produced and discarded. Use this information to 
create baseline statistics against which future measurement can be judged. Nothing should be 
seen as trivial. For example, one of my students visited a company to conduct his waste 
reduction research and discovered that employees used mobile phones to communicate with one 
another in different parts of the plant. A quick search on the Internet revealed that the mobile 
phones could easily be replaced with cheaper walkie-talkies, powered by rechargeable batteries, 
which would drastically cut the business's phone bills. 'Everyone stopped laughing at my waste 
reduction suggestions after that,' the student said. 

Examples of waste measurement statistics include: utility and fuel bills, the number of 
trash bags the business fills daily (placing similar items of garbage into separate containers 
makes this process easier), water consumption figures, raw material invoices, and so on. 

A common way to measure (and appreciate) the amount of physical waste a 
department or business disposes is to 'dumpster dive' (i.e.: collect and examine what has been 
thrown away). 3 'Once you've seen your garbage up close its hard to ignore it,' says Shira Norman, 
a research consultant with YRG Sustainability. As if to prove her point, for over 12 years, the 
Bentley Prince Street carpet company (a division of Interface) has forced employees to record 
what they toss in the trash by sifting through company rubbish (a different department is 
selected to do this every month). Examining the company's rubbish makes it easy to determine 
what can be reduced, re-used, re-incorporated back into production, or sold to a recycler. The 
company now only orders snacks from vending machine suppliers that take back their packaging 
- a move that has greatly reduced the amount of rubbish in office bins. 3 

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Figure 4.2 

Production unit analysis 

© 2008 Jonathan T Scott 



Unit Inputs 

(electricity, water, chemicals, raw materials, heat, cooling, cleaning products, etc... ) 



Product Inputs 

! the output ot'the 
preceding processs) 



The process stage 
being examined 

(including subtasks) 



Product Output 

(the product - or its parts 
- that are sent on to the 
next stage of production) 



Unit Outputs 

(waste, discharge, dirty water, heat, toxins, pollutants, noise, etc..) 



Keep It Simple 

The term 'process mapping' is not normally used by practitioners when they describe the 
activity of investigating and recording inputs and outputs of work processes for waste 
minimisation purposes. 'We just study our utility bills and look in our garbage bins to see the 
amounts of waste being produced,' one sustainability practitioner explained to me, 'then we 
make a note where it comes from. We don't make maps.' When it was suggested that collecting 
waste data, determining its origins, and recording it (to make improvements) is indeed a form of 
process mapping, he (and several others) conceded. The message? Don't overload your waste- 
reduction process map with symbols, technical jargon, or other academic markings that render it 
incomprehensible. Most business will find it difficult to profit from a map that only a handful of 
employees understand. 

Calculating Carbon Footprints 

Calculating a 'carbon footprint' (i.e.: the amount of carbon dioxide a process creates) is a 
trendy way to measure carbon emissions with the added benefit that, when lowered, the 
numbers can be used in public relations campaigns or to prove compliance with emissions 
legislation. Employees usually enjoy seeing how their efforts help reduce environmental 
degradation so displaying carbon emission reductions alongside other relevant data can help 
create motivation and a strong sense of achievement. For more information about carbon 
footprints and their calculation use the free calculators at these websites: 

- www.carbonneutral.com 

- www.ghgprotocol.org 

- http://actonco2.direct.gov.uk 

- www.puretrust.org.uk/Business/Calculator.aspx 

Involve Everyone and Examine Everything 

After the data from measurement is collected it is time to sit down with colleagues and ask 
some tough questions. What types of waste are being produced? How much waste is there? 



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Why does the waste exist? What can be done about it? Note that these questions are merely the 
beginning. The resulting answers (and additional questions) as well as any perceived disruptive 
changes should not be considered as painful obstacles, but rather the path to success. The idea is 
to stay ahead of the rising bar being set by formidable competitors, increasing legislation and 
other exterior influences. Being reactive and playing catch-up is not a viable business strategy. 
Your never-ending goal is to stop paying for more resources than you need and to stop producing 
stuff (non-product) you cannot sell. Everything your business does should be questioned. If 
you work in a financial institution you will need to discuss whether or not you want to buy from, 
invest in or lend money to, businesses that actively ignore the financial advantages of 
sustainability. If you are a manufacturer, what affect will rising raw material and energy costs 
have on your production? What will happen when oil hits $150 a barrel - or $200 - or $300? 
What will you do if a tax is put on carbon emissions or a chemical you use? What will happen if 
the local landfill site suddenly refuses to accept your waste? What if a cleaner, more efficient 
system or process is invented in your industry? What will you do when environmental 
laws tighten? 

Once you have examined your business from top to bottom, start searching for similar 
weaknesses up and down your supply chain (FIGURE 4.3). Higher fuel prices, increasing raw 
material costs and changes in legislation may not affect your business directly, but what happens 
when your suppliers are hit hard? Working with suppliers and paying customers will help you in 
the long-term. 

Figure 4.3 

Map and examination of the entire supply and demand picture 




^Suppliehs 



For example, as stated earlier, Wal-Mart expects to cut $3.4 billion from its annual waste 
disposal costs by ordering suppliers to reduce their packaging by 5%. 4 At the other end of the 
spectrum, Proctor & Gamble discovered that 85% of the energy used in the manufacture and 
use (i.e. the life-cycle) of its laundry products occurred at the customer end and involve heating 
water. As a result the company developed a new product (Tide Coldwater) that enables 
customers to reduce their energy costs by cleaning their clothes with cold water. An added extra 
is that this innovation makes the product more environmentally friendly. 5 It is one of seven 
sustainable products that helped the company generate more than $7 billion in sales within one 
year. 



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5. On-Going Measurement and Record Keeping 

The Sierra Nevada Brewing Company was created in 1979 after company founders Ken 
Grossman and Paul Camusi cobbled together a brewery using second-hand dairy tanks, 
equipment salvaged from defunct beer businesses, and a soft-drink bottling machine. Today, 
Sierra Nevada employs over 450 people and produces nine award-winning types of beer, ale, and 
stout. According to Sierra Nevada's sustainability coordinator, Cheri Chastain, regular 
measurement helps determine where the company is wasting water, electricity, and other 
resources as well as where physical waste is being produced. After a waste source is revealed, 
Cheri then works with teams of company employees to reduce it. 'Record keeping is absolutely 
critical for keeping track of progress,' she explains. 'I keep detailed spreadsheets for all of our 
sustainability related programmes. Without records, there's no way to know whether or not 
we're improving and reaching our goals.' 1 

Typical measurements recorded by Sierra Nevada's waste reduction programme that have 
helped the company save millions of dollars annually include: 

- the amount of material that is recycled through the company's various vendors (which 
includes weight measurements as well as income received), 

- the amount of material that the company reuses (by volume [quantity or weight] - as well 
as what part of the company it went to), and, 

- the amount of material sent to landfill by weight (based on waste hauler invoices). 

To round out Sierra's waste measurements, greenhouse gas inventories are also kept. "The 
amount of water produced and electricity consumed, as well as our natural gas and water 
consumption figures - and carbon emissions - are then compared to the number of beer barrels 
we produce every month,' Cheri says, 'all of which provides me with some great ratios to 
work with.' 

As Ms. Chastain has discovered, it's difficult, if not impossible, to know how much waste a 
company produces, how much waste it has eliminated, or how much money it has saved without 
accurate, on-going record-keeping. For many companies, this involves scrutinising toxic or 
hazardous material purchases (as well as usage costs), examining the amount (and types) of 
waste different departments or processes produce (usually by recording what each one throws 
away), and investigating the fees, extraneous charges, and taxes associated with current waste- 
handling practices. 

The Requirements of a Good Record-Keeping System 

Simplicity is the key to sound measurement. Additional suggestions include: 

- the system should be easy to understand, 

- information and results should be expressed in real-time, 

- collected data should be accurate, reliable, and essential, 

- the entire system should be easy to use (i.e.: more time should be spent pursuing efficiency 
rather than keeping records), and, 

- all information should be easily transferable (i.e.: easily shared and compared with other 
departments and employees). 2 



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Transparency involves displaying the results of measurements. Accessibility involves making 
this information available and readable. Apart from providing informative feedback, regular 
monitoring shows that a business is serious about sustainability. Accessible, transparent 
measurement has also been known to create friendly competitions between employees or 
departments as teams try to outdo one another to reduce waste and resource use. For example, 
the Intercontinental Hotel Group acquired a new software system from SolvelTLabs 3 that 
focuses on over 40 sustainability-based practices that its hotels can adopt - thereby enabling its 
4,000 properties to clearly see on-going electricity usage along with suggestions on how to 
reduce it by up to 25% (a savings of over $200 million annually). As a bonus, the system keeps 
score of energy savings at different hotels so managers can compare their improvements with 
others. Similarly, the waste-free Subaru plant in Lafayette, Indiana (mentioned in section 3) 
makes its waste-reduction results an integral part of plant manager performance evaluations. 

Environmental Audits 

Just as the process of mapping out a work system isn't called process-mapping by waste- 
minimisation practitioners, when setting out to gather and/or check sustainability facts and 
figures, many practitioners don't refer to what they're doing as an audit. The word 'audit', 
however, is appropriate even though most accounting systems fall far short of what an 
understanding of sustainability requires (e.g.: clean air has no financial value, but try living 
without it). Professional auditors go a step further, using the term environmental audit to 
describe the gathering, checking, and analysis of material use - as well as the measuring of waste 
and emission levels. Make no mistake, despite the fact that the word 'environment' makes up 
the name, environmental audits are similar to financial audits in that they are very effective in 
reducing waste. Likewise, environmental audits can be performed by either trained employees 
or licensed professionals and they come in all shapes and sizes ranging from a simple checklist to 
a comprehensive investigation of a company's operations. Typical areas of examination include: 

- facility inspections, 

- the collecting, analysing, and explaining of data, 

- communicating with contractors, customers, regulators, and suppliers, 

- the measurement of key environmental parameters, 

- going over internal records, policies, reports, and objectives, 

- comparing audit results to industry standards (such as ISO 14001 standards and 
guidelines), and, employee skills, thoughts, and motivation levels, 

- Additional services can include degrees of compliance with environmental laws and 
regulations, uncovering the expectations of customers, and liability obligations. 4 

Types of Environmental Audits 

According to the American Environmental Protection Agency, the six most common audits 
performed by professional environmental auditors are the: 

- Acquisition audit. An audit performed before or after a major purchase is made (the 
purchase can include another company, an area of land, and/or a major piece of 



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equipment). The focus of an acquisition audit is usually on potential claims or liabilities, 
particularly regarding environmental damage, that can arise from a major purchase. 

- Compliance audit. Usually part of an overall assessment with an emphasis placed on 
compliance with environmental legislation and comparisons with ISO 14004 
environmental management systems. 

- Due diligence audit. Similar to an acquisition audit in that an assessment is carried out to 
determine potential legal claims and liabilities (usually for potential investors). Health, 
safety, and fire risk assessments are also included as well as site history analysis and 
legislative reviews. 

- Waste audit. The emphasis here is on exploring waste creation and handling (i.e.: ensuring 
that waste is handled safely and stored safely at a reasonable cost) as well as the origin and 
reason for the waste and its production. Hidden waste such as unused raw materials, 
wasted energy and water, and wasted time are also taken into consideration. 

- Waste disposal audit. Often undertaken to comply, in part, with 'Duty of Care' regulations 
to investigate the transport and disposal of waste by contractors. During the first part of 
this audit, waste management documentation is usually the first thing that is checked 
(e.g.: waste management licenses, waste carrier licenses, and duty of care reports). 

- Water audit. Similar to a waste audit, however, the focus is on water wastage. Onsite 
water use is analysed as well as wastewater production and treatment. Water intake is 
measured and compared with output. Discrepancies signify leakage or 

other problems. 5 

- Peer review audit. An audit conducted by colleagues from outside the plant or factory. For 
example, General Electric runs annual 'Green Factory' inspections performed by other GE 
factory managers. 

Despite a growing acceptance of environmental auditing, it's not uncommon to hear 
practitioners say that the results they obtained from an outside environmental audit did little 
more than reaffirm what had already been discovered by employees. As one practitioner put it, 
When we conduct a waste audit we not only measure the amount of waste produced we also 
know exactly where the waste came from. An outside auditor who does not have specific 
expertise in certain fields or equipment can only measure it.' That being said, businesses that 
have been successfully reducing their waste levels for years sometimes feel the need to step back 
and ask an outside specialist to provide a second opinion, reveal a new way of thinking, or 
perhaps instigate a more serendipitous outcome. 

Environmental Audits Don't Hurt 

According to companies that have undergone an environmental audit, the process is relatively 
painless. Particularly for first-timers, there is no shame in admitting a lack of knowledge 
regarding the full range of business operations in terms of regulatory compliance, energy and 
resource use, raw material sourcing, supply-side issues, the creation and delivery of products and 
services, the inputs and outputs of offices and/or production facilities, cost relationships with 
suppliers, and subjects related to environmental management. For example, the Glasgow 

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Housing Association in Scotland (the largest social landlord in the UK) had a first-time 
environmental audit performed at its headquarters by the British Safety Council, which 
identified over $51,000 in savings. In the process several waste minimisation plans were 
developed, a library of resources was created, recommendations were made to get employees 
involved in an efficiency drive, and waste reduction goals were set. 6 

Seen this way, an environmental audit can lead to cost savings that more than pay for the 
price of the audit. Genzyme Diagnostics, for example, a biotechnology company in the UK, had 
an environmental audit performed that uncovered over $80,000 in potential annual savings 
resulting from waste minimisation suggestions, reuse and recycling tips, and lighting and water 
reduction measures. 6 

Getting Started 

- Communicate the goals of the audit to everyone beforehand. Inform employees in every 
department what will be done and why. 

- Identify the parameters of the audit. Determine what will be studied: Waste? Water? 
Energy? One programme? The entire facility? 

- Establish measurement metrics. How will the audit's findings be recorded? How will 
waste be measured (in units, in monetary terms...)? Determine these issues before an 
audit begins. 

- Establish a 'no blame' policy. Keep the emphasis on discovery rather than assigning blame. 

- Carry out the audit during normal, everyday operations to ensure that the figures 
are accurate. 

- Verify and review the results. Check finished work and measurements and review them 
with all concerned. 

- Discuss the results. Bring employees together, ask questions, identify areas that need 
improvement, gather improvement suggestions, and share successes when they've 
been achieved. 

- Repeat the process. After agreeing on goals and objectives, set a date for the next audit 
and review the results. Audits should be conducted on a regular basis. 7 Just don't fall into 
the trap of placing more time and effort into creating measurement statistics than 
performance results. 

For More Information 

Look for specialised private companies, government agencies, and academic institutions with 
experienced staff (always conduct a thorough background check before hiring a professional 
service). For more information, contact: 

- An Environmental Protection Agency (www.epa.gov). 

- The Global Reporting Initiative (www.globalreporting.org) 

- The Institute of Social and Ethical Accountability (www.accountability21.net ) 



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6. Taxes and Legislation 



When setting a tax the idea is to match price with cost. Unfortunately, the cost of what's 
heavily taxed, what's minimally taxed, and what's not taxed sometimes doesn't square up. For 
example, a chemical that sells for $20 per kilo may be subject to minimal taxes to encourage 
sales on an industrial scale, but what is the chemical's true cost when it makes its way into water, 
food supplies, and human bodies? Of course, raising money isn't the only function taxes 
perform. Taxes also carry the potential to discourage the sale of the items or activities being 
taxed (which is why high taxes are often placed on alcohol and tobacco). Unfortunately, when 
taxes are placed on items or activities that people consider valuable they can have the same 
effect. Consider the duty placed on employees as a case in point. Most businesses are taxed, in 
part, on the number of individuals they employ (a practice that began in 19 th century Germany) 
so the more people a business hires the more taxes it has to pay. Equally as mind-boggling is the 
fact that the more a person works the more taxes he or she has to pay (in the USA alone, 
two-thirds of personal income tax - which constitutes 80% of the tax funds raised by the US 
government - is derived from the sale of labour). What effect does this have on consumer 
spending (the engine that drives a nation's economic growth)? 

Making Taxes Pull Double Duty 

For years, a growing number of independent thinkers have been proposing that current tax 
structures could be put to better use. The idea is simple: to tax what society wants less of (e.g.: 
pollution and waste) and to reduce or eliminate taxes on what it wants more of (employment 
and income). A tax on carbon emissions, for example, could help reduce climate change and the 
costs and dangers associated with it. Unlike a cap-and-trade system, which allows markets to 
stipulate the amount of emissions that are tolerated (and which allows for the price of carbon to 
vary), a greenhouse gas tax would set a fixed price and let it determine the amount of emissions 
put forth. In other words, the higher the tax on greenhouse gases, the greater the incentive to 
reduce emissions. How much tax would have to be imposed? To achieve an adequate reduction 
in C02 emissions without unduly hurting the world economy, it's estimated that the tax would 
probably have to amount to between $20 to $50 per ton of carbon emissions produced. In the 
United States, this would, in part, mean imposing a tax on gasoline, diesel fuel, and motor oil of 
around 6% and a coal-produced electricity tax of about 14%. - 1 

Since carbon emissions aren't the only harmful discharge the world wants less of, a similar 
duty would be placed on all dangerous discharges including chlorine, sulfur, tetrafluoromethane, 
hexafluoroethane, hydrofluorocarbons and nitrous oxides as well as hazardous materials such as 
chemical fertilisers, pesticides, and phosphorous. Detrimental practices including topsoil 
depletion, non-renewable logging, and most mineral and metal extraction processes (including 
the mining of bauxite, chromium, coal, gold, and silver) would provide additional taxation 
targets. Waste sent to a landfill site or tossed into an incinerator would be included as well. 

No doubt many businesspeople will cringe at the prospect of a massive shift in taxation, but 
it's what would not be taxed that makes this proposition all the more appealing. Corporate taxes 
would be reduced or eliminated, employment taxes would end, and personal income tax could be 
greatly lowered. People and businesses could then pocket most, if not all, of their earnings and 
no company would be penalised for employing more workers. Taxes on interest, savings plans, 

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retirement accounts, and college tuition accounts could also be eliminated. In addition: 

- Businesses endeavoring to become more efficient would have more control over their tax 
burdens. 

- Profits would increase as businesses became more sustainable. 

- The quality of goods and services would improve (such is what happens when waste 
is eliminated). 

- The costs and dangers associated with climate change would be mitigated. 

Needless to say, a move of this magnitude would have to be gradual to allow industries to 
adapt. Furthermore, once a more sensible shift in taxation has been put into place, a common 
sense approach to subsidies could also be adopted. Energy (including wind and solar power) 
could then trade at its true cost and billions of taxpayer dollars currently being directed toward 
problems that create waste and pollution could be redirected toward schools and social 
programmes, job creation, and the promotion of cleaner and healthier working and 
living environments. 

Legislative Involvement 

Redefining Progress (www.redefiningprogress.org) is a leading sustainability think tank 
located in the USA. For over 12 years it and several other organisations have been studying the 
effects of taxing waste. The conclusion is that a quarter or more of all American public revenues 
could be replaced if the government started taxing waste and natural resource consumption 
instead of revenues and income. A modest introductory tax placed on the burning of fossil fuels, 
for example, coupled with a reduction in payroll taxes, could boost America's GDP and create 1.4 
million new jobs while cutting climate change pollutants by 50%. 2 The nation's economy would 
thus be put on a sounder footing because growth would be more sustainable, less costly, and less 
dependent on foreign commodities. The problem, of course, is that there are few people in 
government who have the vision (or backbone) to commence such a change. Equally as true is 
that most people don't want higher taxes placed on anything - particularly (and paradoxically) if 
they've already invested significant amounts of money in inefficient homes and businesses, 
wasteful heating systems, fuel-guzzling vehicles, and so on. Enter the need for legislation. 

Historically, businesses have always fought against most forms of legislation, but the costs 
associated with climate change are causing many CEO's to think twice about how laws that 
promote higher taxes and carbon caps can be used to help industry. In early 2007, for example, 
the CEO's of several top American corporations called on President George W. Bush to enact 
mandatory reductions in carbon emissions to combat global climate change (their goal was to 
cut greenhouse gas emissions 60% by 2050). The group, calling itself the U. S. Climate Action 
Partnership (USCAP), consisted of chief executives from Alcoa, BP America, Caterpillar, Duke 
Energy, DuPont, the FPL Group, General Electric, Lehman Brothers, PG & E, and PNM 
Resources - along with four leading non-government organisations including Environmental 
Defense, the Natural Resources Defense Council, the Pew Center on Climate Change, and the 
World Resources Institute. By banding together to avoid a patchwork of potential costly and 
conflicting state or regional regulations, the group is trying to work with lawmakers to set goals 

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and targets that allow businesses time to make changes and implement solutions that will 
improve both the environment and energy efficiency, while protecting national trade and 
the economy 3 

Investor Involvement 

Intelligent CEO's and shrewd, independent thinkers aren't the only ones hankering for 
sustainable change. In September of 2007, a prominent group of state officials, state pension 
fund managers, and environmental organisations filed a petition with the Securities and 
Exchange Commission asking it to adopt guidelines requiring all public companies to disclose 
the risks of climate change to their business as well as the actions they're taking to mitigate 
those risks. The 115-page petition, signed by state treasurers, attorney generals, and state fund 
managers in California, Florida, Maine, New York, North Carolina, Oregon, and Vermont, states 
that 'climate change has now become a significant factor bearing on a company's financial 
condition... Investors are (therefore) looking for companies that are best positioned to avoid the 
financial risks associated with climate change and to capitalise on the new opportunities that 
greenhouse gas regulation will provide.' The petition went on to say that 'Interest in climate risk 
is not limited to investors with a specific moral or policy interest in climate change; climate 
change now covers an enormous range of investors whose interest is purely financial...' 

The group claims that investors have the right to know: 

- how seriously companies are taking climate change into account when making strategic 
business decisions (particularly the physical risks that climate change imposes on a 
company's operations and financial condition), 

- the names of companies that are 'out front' in their response to climate risks 
and opportunities, 

- the names of companies that are 'behind the curve' (so they can be avoided by investors), 
and, 

- legal proceedings relating to climate change. 4 

Guidelines approved by the SEC in January of 2008 now require companies to weigh the 
impact of climate-change laws and regulations (including overseas regulations and accords) 
when assessing what information to include in corporate filings. 

It's Not Just Big Business 

Small businesses are also calling for increased legislation with the expectation that they'll 
soon reap its benefits. For example, an organisation called Small Business California worked to 
support the state's Global Warming Solutions Act (AB 32), the passing of which imposes tough 
legislation to tackle global warming. The idea behind AB 32 is simple: to balance the reduction 
of hazardous emissions with incentives for improvement. The programme works like an interest 
free loan: businesses are encouraged to exchange the profits they normally lose through wasted 
energy for energy-saving solutions (e.g.: increased insulation, more efficient machinery, etc) that 
quickly pay for themselves. The irony is that environmental groups have been lobbying for such 
changes for years - yet their efforts obtained fruition only after the local business community 
jumped on board. 5 

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Additional Examples 

Taxes and legislation designed to reduce waste undoubtedly leaves some people fuming, yet a 
government report published in the United Kingdom states unequivocally that businesses and 
consumers want their government to do more to make it easier to be less wasteful. 6 The 
mandatory labeling and ranking of electrical goods and machinery in terms of efficiency (e.g.: 
Energy Star labels) is just one example of how legislation can help inform consumers about cost 
and energy savings while increasing the demand for environmentally friendly goods. Other 
changes being considered in the UK would make it easier for companies to install green 
technologies like solar panels and wind turbines. Currently, most businesses have to go through 
a lengthy planning application process (from 8 to 16 weeks) and pay the equivalent of $3,000 if 
they want to install a solar panel or small wind turbine. To encourage cleaner energy practices, 
however, the government has expressed an interest in placing renewable energy equipment 
under a 'permitted development' category, which would allow it to be installed without the need 
for planning permission. A 'route map' for improving the efficiency of new buildings with the 
aim of reducing carbon emissions is also being considered. 

Meanwhile, in the USA, California officials discovered that most HVAC air ducts leak 20% to 
30% of the heated or cooled air they carry - so the government reduced leakage rate allowances 
to 6%. Further studies revealed that outdoor lights for parking lots and streets directed 15% of 
their beams up, not down. So outdoor lighting waste and leakage was set at 6%. Similarly, in 
2009, a law was passed banning inefficient big-screen televisions from being sold in the state 
(the law goes into effect in 2011). The irony is that although California's energy prices are the 
highest in the United States, its citizens pay the country's lowest energy bills thanks to 
increasing laws that outlaw inefficiencies. Interestingly, the state also 'de-coupled' utility profits 
from consumption rates (i.e.: utility companies now base their profits on the number of 
customers serviced rather than the amount of electricity sold). So instead of selling more 
electricity to obtain more profit (which encourages waste), customers are encouraged to use less 
electricity so that more customers can be served by the limited amount of electricity that is 
produced by any given power company. 7 This move lowers the state's energy needs while 
contributing to higher power company profits and an increase in consumer savings. 

Additional moves to reduce wasted energy include tax breaks for buyers of fuel-efficient 
vehicles, equipment, appliances, and buildings. New York City is getting in on the act by 
declaring that all taxis must be fuel-efficient hybrids by 2012 - a move designed to save taxi 
drivers over $1,000 per month while eliminating tons of greenhouse gases. The moral of the 
story? Expect more such laws. The best advice on offer is to not wait for your government to 
tell you what you already know is true. Exceed the law by becoming as waste-free as possible. 
You can't go wrong that way. 



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7. The Perils of Green- Washing 



The term used to describe the deliberate distortion of the truth in order to make false 
environmental claims is called 'green washing' and the legislation that covers this area is 
notoriously lax. For example, it's within the law for the 'recycled' symbol to be placed on any 
product or its packaging if either one (or both) contain just 1% recycled material. Similarly, a 
business can make its products (or production processes) slightly less harmful to the 
environment, yet still boast in its advertising that it's 'greener'. Major oil companies are 
particularly vocal. Under attack for reaping windfall profits from soaring fuel prices, many oil 
companies are trying to reposition themselves as part of the solution to the world's energy 
problems rather than its chief cause. Other manufacturers have recognised that they too can 
burnish their environmental image - without having to do much - as a way of promoting their 
products. Naturally, there's nothing wrong with touting green credentials if the efforts behind 
such claims are valid. But problems can and do occur when talk and promises turn out to be 
nothing more than green washing. 

In the spring of 2007, TerraChoice Environmental Marketing (a green-certification 
organisation) sent researchers into six national retail businesses to gather data about 'green' 
products. All in all, 1,018 products were looked at that covered a broad range of the consumer 
spectrum from air fresheners to appliances and televisions to toothpastes. Astonishingly, only 
one product turned out to be truly green - a paper product from Canada. All the others 
contained misleading claims that could not be proven. These claims included: 

- Not Revealing Hidden Trade-Offs: 57% of the misleading claims made by manufacturers 
involved suggesting that the entire product was green when, in fact, the green aspect being 
promoted represented only a part of the product. The remainder of the product was both 
wasteful and destructive in terms of energy consumption, forestry destruction, and 
water usage. 

- No Proof to Back Up Claims: 26% of the products examined boasted green credentials, yet 
the manufacturer was not able to confirm the claims being made. 

- Vague Labeling: 11% of all misleading statements involved making a claim that was either 
poorly defined or meaningless, which made it likely to be misunderstood by consumers. 
For example, displaying a recycled symbol on the product without explaining what had 
been recycled. 

- Irrelevant Claims: 4% of the green claims turned out to be true, yet were of no real value. 
For example, boasting that a product is free of CFC's may sound good, however, since 
CFC's have been illegal for almost 20 years making such a claim can be seen as a deliberate 
attempt to mislead the public into thinking that the manufacturer has gone the extra mile. 

- Promoting the Green Side of Hazardous Products: Around 1% of manufacturers made 
claims that could be used to distract the consumer from the fact that the product is 
harmful to begin with (e.g.: 'organically grown' tobacco). 

- Out-and-Out Lies: Less than 1% of the products studied issued claims that were 
absolutely false, usually by using or misrepresenting a 'green' certification by an outside 
authority 1 

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Why Do Businesses Green Wash? 

Apart from the short-term financial benefits involved, the main reasons why organisations 
engage in green washing include: 

- an attempt to divert the attention of regulators and reduce pressure for regulatory change, 

- the desire to persuade critics that the business is well-intentioned and/or has changed 
its ways. 

- a need to expand market share at the expense of rivals that are legitimately trying to 
become greener, 

- an attempt to reduce the turnover of environmentally conscious staff (or to attract more 
such staff), and, 

- a desire to make the company appear more attractive to investors. 

Another Twist: Capitalising on Guilt 

During the Middle Ages, professional pardoners sold 'indulgences' that allowed sinners to be 
forgiven for their sins. Suffice it to say, the concept of paying a second party to atone for the sins 
of the first appears to still be alive and well. 

The idea behind buying and selling carbon credits began in 1989 when global power firm AES 
invested $2 million in a forestry project in Guatemala. The company made its purchase under 
the belief that laws would soon be enacted which limited carbon emissions and that these same 
laws would probably give companies struggling to reduce their carbon emissions the option of 
offsetting them. 3 A growing number of businesses have since climbed onto the bandwagon by 
allowing customers to offset their carbon emissions by purchasing carbon credits. For example, 
some airlines will voluntarily add a few dollars to the price of their tickets and several power 
companies provide the option of paying a higher monthly fuel bill to help offset carbon 
emissions. In other examples, Range Rover automobiles have an emissions offset for the first 
45,000 miles (72,000 kilometers) factored into their purchase price and a ski resort in Vail, 
Colorado allows skiers to buy energy credits to help buy a wind turbine so in the future they'll be 
carbon neutral as they're lifted to the top of a nearby mountain. 

Of course, the money raised for carbon credit programmes is supposed to be used for building 
or promoting environmentally friendly projects such as the planting of trees, the protection of 
forests, the funding of alternative energy programmes, or the instigation of a pollution cleanup 
campaign - and according to the World Bank, approximately $100 million is given on behalf of 
customers every year for these purposes. Yet some of this money never reaches its intended 
destination. Brokers have been known to skim as much as 60% off of carbon-offsetting 
investments as they're passed from one middleman to another, tree-planting schemes have been 
found to be nonexistent, and some solar energy projects have reportedly turned out to be little 
more than scams. Money invested in environmental cleanup campaigns has also been called 
into question (particularly campaigns that have already been paid for) and carbon credits have 
been repeatedly sold to any number of different buyers. 



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Separating the Wheat from the Chaff 

With so much room for abuse, businesses wishing to partake in green or carbon offset 
programmes are encouraged to investigate all claims before handing over any cash. Creators of 
greenwash campaigns are very good at fooling activists, customers, journalists, and politicians alike. 
Protective suggestions include: 

- Use common sense. If a company's claims seem too good to be true they probably are 
(particularly if the company is situated in a traditionally non-green industry or its product 
portfolio is filled with goods that aren't green). Don't be fooled by slogans, tear-jerking ads, or 
safety claims designed to seduce. 

- Do your homework. All products have a hidden history. Even bamboo, which is often billed as 
a green alternative to everything from building materials to textiles, uses hazardous chemicals 
in its processing (e.g.: sodium hydroxide, a corrosive chemical used in drain cleaners, and carbon 
disulfide — both chemicals are rarely recaptured and reused after processing). Do some research 
before buying into any green claim. 

- Ask questions and demand documentation. If a company can't back up its claims with valid 
certifications, official audit reports, or similar documentation it's probably not telling the truth. 
Some companies, for example, state in their advertising that they fund endangered forests, 
wetlands, and species. What is not said, however, is that they were forced to do so by law 
because of their destructive practices. 

- Seek consistency over time. It's quite common for companies to make announcements about 
changes in policy or the launching of new initiatives only to starve their plans of funds later on 
when the spotlight fades. To avoid falling victim to this practice, investigate the longevity and 
success of a company's previous green projects as a way to help predict the feasibility of 

new ones. 

- Confirm the validity of industry associations. There's no shortage of questionable 'regulatory' 
industry associations that companies claim are watching over them and their industries. False 
third-party tactics makes it easy for companies to hide behind a facade of smoke and mirrors. 

- Look for trustworthy certifications. These include the 'EPA label, 'Energy Star' (for appliances 
and electronics), the 'EcoLogo' and 'Green Seal' (for cleaning products), and the 'Forestry 
Stewardship Council' (for wood and paper products), and so on. 

- Follow the money. Some businesses make private donations to groups or interests that don't 
square with their public statements. Examples include companies that claim to be doing 
everything possible to lessen waste and pollutants, but are secretly funding lawsuits, legislation, 
and other measures to prevent them from having to do so. 

- Test for international consistency. To determine if a company is truly turning green, see if it 
operates under different standards in different countries that have little or no regulation. 

- Examine how the company handles its critics. Some companies will try almost anything to 
silence their critics. Tactics range from spouting legal threats to collaborating with police and 
military forces. Obviously, such practices are not a good indicator of environmental 



compli, 



ance 



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For additional suggestions on how green-washing campaigns can be spotted, visit: www. 
greenwashingindex.com. 

Short-Term Gains, Long-Term Pain 

With an increasing number of consumers and consumer groups on the lookout for 
disingenuous companies and their green washing campaigns, it's becoming more difficult to get 
away with making deliberately false claims in order to obtain a short-term influx of revenue. 
For example, in July of 2007, Royal Dutch Shell was ordered by French authorities to withdraw 
several costly advertisements that showed flowers coming out of smokestacks. Woolworths in 
Australia was publicly named and shamed in August that same year for selling toilet paper that 
carried fake sustainable forest fiber labels. Other companies have had fines and/or experienced 
drops in sales for similar unethical or illegal behaviors. For example, MacMillan Bloedel, one of 
Canada's largest forest-product companies, was labeled a serial forest-clearer and a chronic 
chlorine user by environmental activists and subsequently lost 5% of its sales almost overnight 
when it was dropped as a UK supplier by Scott Paper and Kimberley Clark. 4 Simply put, neither 
Scott Paper nor Kimberly Clark wanted the negative publicity. 

The Bottom Line 

Companies that greenwash not only weaken brand image and invite further scrutiny, they 
also diminish the concept of becoming greener, which is something that doesn't rest easy with 
companies that make the effort. Recently, the American Federal Trade Commission called for a 
special meeting dedicated to the update of environmental guidelines, which will make green 
washing more of a bad idea. The European Union is even more vociferous. Simply put, short- 
term duplicity designed to fool customers and the public only leads to long-term pain. 
All it takes is one dishonest practice to be exposed in the media or on the Internet and in a flash, 
weeks, months, or perhaps even years of costly consumer retribution may have to be dealt with. 



© EFMD www.efmd.org 



PROCESSES 



A process is defined as: (1) a series of progressive, interrelated 
steps or actions from which an end result is attained, or, (2) a 
prescribed procedure or a method of conducting affairs. Either 
way, processes form the belief systems, philosophies, or thought 
patterns that constitute the work environments in which goods 
and services are manufactured (seen from this angle, a business 
process can also be referred to as a 'business model' or 'the way we 
do things around here'). Most practitioners agree that for any 
business process to function properly, total commitment from all 
involved is mandatory. Success is also reliant upon a perfect fit 



8. Service and the Performance Economy 



47 



Figure 8.1 

Energy and manpower ratios in production 




III 



f 



Raw Materials 



> Amount of energy used to extract raw V Amount of manpower needed to extract V 

materials and produce basic materials w raw materials and produce basic materials w 




Manpower needed to transform 
basic materials into products 



Iff 



+ 



Energy needed to transform 
basic materials into products 




I 



Finished Products 




As far back as 1973, several far-sighted individuals working for the European Commission 
made two important observations: (1) oil prices are going to continue to increase due to 
demand, and, (2) no matter how many jobs are created in the coming years they will not be 
enough to satisfy the continent's growing population. Not knowing the solutions to these 
challenges, the EC asked Walter Stahel, a Swiss architect working out of Geneva, to examine the 
relationship between energy use and manpower in production. Sometime earlier, Stahel had 
discovered that roughly three-quarters of all industrial energy consumption is associated with 
the extraction and/or production of basic materials. The remaining one-quarter, he observed, is 
used in the transformation of materials into finished goods or buildings. Conversely, he noticed 
that the opposite is true of labor. About three times the manpower is used to convert basic 
materials into finished products (or buildings) than is required in the extraction and production 
of basic raw materials (see FIGURE 8-1). 

Being an architect, Stahel used this information to conclude that it's less wasteful and more 
cost effective to remodel old buildings than construct new ones. In other words, extending the 
life of a building draws out the value of the labor and energy that went into it (i.e.: increasing the 
use of a building to twice its intended life means that the original costs of its materials and 
energy are halved and the cost and subsequent waste of constructing a new structure are 
avoided). Perhaps not surprisingly, Stahel noted that his life-extension principle applies to most 
products as well. Put another way, it's less wasteful and more cost effective to reuse, repair, 
remanufacture, and recycle existing products than to manufacture new ones from virgin 
raw materials. 

Look carefully at this revelation because it reveals that in the first stage of many 



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manufacturing processes more money is usually spent on energy than labor when it could be the 
other way around. In other words, by extending the life of the materials that go into a product 
or extending the life of the product itself - less energy is used, less waste and pollution is created, 
and more people are employed - with no long-term increase in costs. Indeed, manufacturing 
costs tend to decrease with product life-extension practices. 

To expand and build upon his discovery, Stahel and a colleague (Orio Giarini) founded the 
Geneva, Switzerland-based Product-Life Institute (www.product-life.org) to research and 
promote what they call a service economy (also known as a lake economy or a functional 
economy) with the idea that goods and materials should be used as long and as often as possible 
to promote a healthy, sustainable economy. 

The opposite of a service or lake economy is a river economy in which raw materials 
continuously flow along an insatiable manufacturing stream and end up as landfill. In other 
words, the raw materials, manpower, and energy used to create river-economy products are used 
for a short period of time and then thrown away. 

For the most part, there are two ways a more efficient 'lake economy' or 'service economy' can 
be created. The first is to reuse, repair, or remanufacture products (including buildings), which 
facilitates job creation, and ultimately recycle materials and molecules. The second is to optimise 
the performance a product provides by converting the product into a service so as to keep its 
materials in the hands of the manufacturer for as long as possible. 

Benefit Perception and Service 

Most people, when they purchase a product, are not interested in owning the product per say. 
Instead, they're seeking the benefit the product delivers. For example, when an airline passenger 
purchases a ticket, he or she seeks the benefit of traveling from one place to another; no one 
expects to purchase part of the plane. This line of thinking can be adapted to other situations as 
well. For example, when consumers buy home heating oil most of them don't want to own a 
dirty, toxic, and expensive fossil fuel. Instead, they want the heat the oil provides - not the 
substance itself and certainly not the expense or the involvement of delivering, containing, and 
burning the oil. 

Now let's add service to the equation. Personalised service not only keeps customers coming 
back, it can also help a business keep track of the benefits its customers seek. Studies have 
shown that a business can lose 20% of its customers if its products are of poor quality, yet 66% 
can be lost if the service itself is perceived as being poor. Additional statistics claim that it costs 
five to ten times more to attract new customers than it does to retain old ones - and that the 
average company can lose half its customers every four years if it's not careful. 

Putting Benefit Perception and Service Together 

Safechem, a division of Dow Chemical, is a solvent distribution company that incorporates 
benefit perception and service into a portfolio range offered to general industries across Europe. 1 
These services include waste collection and refinement, parts washing, oil collection, and 
chemical recovery and disposal. In short, Safechem is a service company. Its customers do not 
have to purchase the solvents they need to conduct their operations nor do they have to pay for 



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costly application equipment or high disposal fees. Instead, Safechem focuses on the benefits its 
customers seek by traveling to the place where its customers work and applying any needed 
solvents for them. Afterwards, Safechem cleans up the work site, transports the used solvents 
back to the Safechem workshop, and cleans and/or recycles everything that was used - including 
the solvents, the washers, the spray guns, and the steel drums - in preparation for its next 
customer. By selling 'square meters of cleaning' rather than gallons of solvents, Safechem: (1) 
extends the life of its materials, (2) focuses on the benefits customers seek, and, (3) reduces 
waste and costs by reusing its materials instead of making (or buying) more. Clean Harbors 
Environmental Services in North America offers its customers similar services. 2 

The Payoff for Customers 

Why would a customer want to choose a service (or the benefit a product provides) over a 
product itself? The incentives include: 

- only having to pay for what is actually needed, 

- the avoidance of major equipment purchases and subsequent maintenance costs, 

- the elimination of end-of-life equipment and waste disposal costs, and, 

- a reduction or elimination of inventory. 

The Payoff for the Service Provider 

In 2004, the Austrian government commissioned two studies that looked into the potential 
profitability that chemical companies have in regards to offering a service rather than selling a 
physical product. Both studies concluded that over half of the 4,000 chemical companies in 
Austria would benefit by adopting a service programme. Moreover, because of the efficiency 
inherent in a service system, it was estimated that chemical consumption in Austria could be cut 
by a third and the average company could expect cost savings equivalent to over $12,000 per 
year. 3 Bear in mind that although the chemical industry is being used extensively as an example 
in this chapter, chemical companies are not the only businesses that can benefit from a product- 
to-service arrangement. Similar schemes have been devised for home washing machines (the 
customer only pays for the number of washes), computers, cars and refrigerators - almost any 
product that is traditionally bought, used, and thrown away. 

The Michelin tyre company, for example, has moved into selling the performance of truck 
tyres rather than just tyres, because it can produce a long-life tyre that's easy to re-tread, thereby 
earning a higher profit. If a re-treadable tyre sold as a performance service can travel twice the 
distance (e.g.: the distance the tyre can travel is sold rather than the tyre itself - with the tyre 
remaining under the control of the company) the company earns more money whereas if it 
produces and sells a longer-distance tyre, the buyer would probably not pay the higher price 
involved (to pay for R&D and disposal costs) and company turnover would decrease. 

The hotel industry has benefitted from a similar practice for years thanks to linen suppliers 
that provide a service rather than sell a product. Many hotels do not own their linens (sheets, 
towels, etc). Instead, these items belong to a textile company that does the washing and repair 
with an average economic break-even point of around three years per item. In other words, the 
linens have to last at least three years before the company can make a profit so the company is 



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driven to lease high quality textiles that last longer. A similar example, called pay by the hour, is 
found in the gas turbine industry. Once again, the benefits enjoyed by the service 
provider include: 

- control over the maintenance of the product and its equipment, which translates into long 
product life, 

- the lowering of unit production costs because not as many units have to be produced 
(which reduces material and energy consumption), 

- wastage is reduced to very low levels because money saved in waste reduction means lower 
costs and more profit for the provider, 

- revenues either increase or are solidified because services are usually needed by customers 
continuously throughout the year, whereas equipment purchases, particularly big-ticket 
items, are often only made during times when customers can afford them, 

- a new dimension is added to the service provider's product portfolio package, which can 
provide a much needed boost in company competitiveness, 

- skilled jobs are created (workers not needed on production lines can be trained as 
service appliers), 

- overall waste is reduced because the product itself is no longer moving as quickly 
toward landfill. 

The Hurdles 

Obviously turning a product into a service is not a one-size-fits-all concept nor is it a practice that 
can be adopted overnight. The standards, operations, and procedures of the service provider must 
be adapted to work hand-in-glove with those of the service buyer to avoid dysfunctional conflict. 
Agreeing on a service fee is another formidable task that requires a full understanding of all 
operations and their costs. Additional service challenges exist in changing outdated behaviors and 
old ways of thinking; both the service-provider and the customer may find it difficult to overcome 
institutional and personal stubbornness. Customers, for example, must break the habit of what 
Jonathan Chapman, senior lecturer at the University of Brighton (UK), calls 'adulterous 
consumption'. Chapman compares the possessions that consumers purchase with the idea of 
adultery. 'We make a commitment to one thing and then become distracted by a younger model,' he 
says, '(because nowadays) everything is temporary if we want it to be.' 4 What Chapman is referring 
to is the human desire to own the products that we use - even though this attachment often 
vanishes when a newer version becomes available. This throwaway-and-buy-another addiction is 
difficult to stop not least of which because many businesses profit from, and promote, it. Indeed, 
the entire concept of 'Industrial design was specifically invented to convince people that their 
washing machine, their car, or the refrigerator they had was out of fashion,' says Walter Stahel. 

When one takes into account the low prices of everyday durable goods the concept of turning a 
product into a service can become even more difficult to implement. 'You can't find anybody who 
will work on a microwave oven now,' laments Steve Cruciani, owner and operator of Steve's 
Appliance Installations in Berkeley, California. What's the point? For $65 you can get another one.' 5 



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But the main reason why service concepts are of little interest to so many businesses 
(particularly small to mid-sized businesses) is the initial costs that can incur. Without a minimal 
density of goods on offer, "servicising" products (that is, reverse logistics: collecting, taking 
apart, and remanufacturing used products) can be difficult and expensive. Selling a product 
outright avoids such problems because it delegates disposal responsibilities to the buyer. Even 
big companies can be turned off by turning a product into a service not least because it requires 
a uniquely different mindset. Large production-oriented businesses, for example, traditionally 
invest more in capital expenditures because they are geared toward a production setup intent on 
making as many products as possible. Service businesses, on the other hand, tend to invest 
more in research and development. A service setup can therefore pose difficulties in terms of 
resource allocation to an organisation that wishes to do both. More to the point, becoming 
service-based requires long-term thinking and commitment, which goes against the short-term 
production strategy of many companies. 6 

Lastly, although a service-oriented selling system is applicable to more products than most 
manufacturing-oriented businesses would admit, sometimes turning a product into a service 
does not make sense. For example, a hardware store that sells drills may find it difficult to 
market and sell a hole-drilling service because the less expensive a drill is to buy, the more 
impractical and obsolete a hole-drilling service becomes. Moreover, a hole-drilling service may 
not be available when it's needed - or customers may want to drill holes on their own and 
conclude that owning a drill and having it on hand is more cost effective than paying for a 
service. In these situations, equipment rentals can handle short-term customer requirements. 
In the long-term, however, an alternative is needed that maximises the benefits that servicising 
provides while avoiding the perceived stigma of non-ownership. And that, say several service 
advocates, can be found in leasing. 



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9. Leasing and the Performance Economy 



After formulating his 'energy versus manpower' production ratio, industry analyst Walter 
Stahel coined the phrase 'cradle to cradle' to help explain his notion of a closed-loop 'lake 
economy'. According to Stahel, in an ideal cradle-to-cradle (or closed-loop) system, waste would 
not exist because waste would be seen as an asset in transition and be used as a raw material. In 
other words, when a well-designed product reaches the end of its useful life it would be returned 
to its manufacturer to be reused, repaired, or remanufactured to facilitate job creation and 
reduce waste. Today, many researchers credit the Xerox Corporation with pioneering cradle-to- 
cradle practices in the 1980s by leasing photocopiers instead of selling them. The idea was to 
provide the company with a reliable source of parts and materials that could be used in 
remanufacturing 'closed-loop' processes. 

Elsewhere, the Collins & Aikman Floorcovering company (now part of the Tandus 
Group) is widely considered to be the first business in the carpet industry to take the closed-loop 
plunge by collecting and breaking down old carpets into material for new carpets. Much to the 
company's surprise, making carpet backing from re-processed carpet waste not only proved to 
be much cheaper than that made from virgin raw materials, the end product also turned out to 
be more stable and softer. This pivotal discovery reduced the company's raw material costs, 
resulted in a new and inspiring company motto ('Mining buildings rather than resources') and 
allowed Collins & Aikman to enjoy double-digit growth in both revenues and profits when the 
entire carpet industry was growing at about 4% a year. 1 

With old carpets proving to be a superior raw material source, it wasn't long before another 
multinational carpet maker, Interface, got in on the act. Interface makes 40% of all the carpet 
tiles sold on earth, has manufacturing centers in 33 global locations, and sells carpets in 110 
countries on six continents. This activity consumes a lot of raw materials and produces a lot of 
waste. Since most carpet-manufacturing processes require about one kilogram of fossil fuel to 
make almost half a kilogram of carpet material, and because carpets can take up to 20,000 years 
or more to decompose, the head of Interface, Ray Anderson, decided that it would be in the best 
interests of his company to become not only sustainable, but restorative (i.e.: to put back into 
the environment what his company uses). 

According to Interface, color, texture, comfort underfoot, acoustics, cleanliness, ambience, 
and functionality are the reasons why most people wish to have a carpet. Since it's not necessary 
to own a carpet to obtain these benefits, Interface looked into how it could retain ownership of 
its products and the value of the materials, labor, and energy that went into making them. To 
achieve this goal, Interface developed what it calls an 'Ever Green Lease' in which the company 
focuses on leasing what a carpet is supposed to deliver rather than selling the carpet itself. 
Turning a product into a service demands a close relationship with customers in order to 
discover what they want in terms of service - and the company needed to establish a steady 
supply of recyclable raw materials to make its leasing concept feasible - so employees at 
Interface realised they had to do some work. Through in-depth research, they discovered that 
most carpet wear occurs in heavily trafficked zones leaving areas around furniture and walls 
virtually untouched. This is good news for customers because it means that when a leased 
carpet begins to show wear, Interface will come in, pull up the worn areas, and immediately 
replace them (a service that is part of the lease arrangement). Customers are thereby relieved of 

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the expense of purchasing a new wall-to-wall carpet as well as the time and bother of shutting 
down an entire work area while a new carpet is installed. Moreover, the customer is not 
responsible for the costs of disposing the old carpeting because Interface takes it back to its 
factory and uses it to make new carpets. Further cost reductions for Interface and its customers 
have come about as the company substitutes oil-based carpet fiber materials with more 
environmentally friendly fibers that use less materials (and energy) and create less 
production waste. 2 

Although Interface admits that customers balk at the misperceived notion that leasing a 
carpet is more expensive (the company insists it isn't), the payoff from its other improvements 
have been enormous. By changing from a carpet selling business to one that more resembles 
asset management and reclamation, Interface, which claims to be halfway to achieving its 
sustainability goals, nearly doubled company employment, doubled its profits and increased its 
stock price 550% over a five year period. 3 

Not to be outdone, DuPont has developed a similar carpet leasing programme to enhance its 
carpet manufacturing arm. DuPont's leasing service includes free consultations, quick 
installation that minimises business disruption, professional cleaning, and on-the-spot spill and 
stain removal. Furthermore, because DuPont runs several different manufacturing operations, 
fibers from its carpet reclamation process can also be used to manufacture auto parts and sound 
insulation products. 4 

It's Not Just Photocopiers and Carpets 

Electronic equipment, paint, cars, wood pallets, reusable totes, furniture, rags and linens, 
parts washers, almost anything - including temperature - can be leased. The Carrier air 
conditioning company in the USA, for example, leases cooling services to its clients rather than 
air conditioners. 2 As with any leasing arrangement, ownership of Carrier's air conditioning 
equipment is maintained by the company, which means that Carrier is highly motivated to keep 
its products in optimum condition. This means they last longer (which reduces costs). Carrier is 
further driven to ensure that the building where it administers its cooling service is energy 
efficient because the more efficient the building the better and more cost-effective its product 
will be, which translates into higher profits for Carrier. Customers love the arrangement because 
Carrier's commitment to increasing efficiency, reducing waste, and lowering costs ultimately 
means lower all-around heating and cooling prices for consumers. 

In a similar fashion, the Bank of Japan collaborated with Japanese power companies to 
facilitate the leasing of energy-efficient automobiles, home appliances, and water heaters to 
everyday consumers. The aim is to encourage and promote the development of energy-efficient 
appliances while reducing the nation's energy requirements, carbon emissions, and waste. 
Appliances that aren't efficient are not allowed into the programme, which encourages the 
manufacturers of wasteful products (who want to be included in the programme) to make their 
products more sustainable. 

Does Leasing Always Close the Manufacturing Loop? 

Unfortunately, no. Sometimes a customer will purchase a leased product at the end of the 
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lease term and never return it to the manufacturer. Similarly, after a transfer of ownership, the 
customer may sell the leased product on the second-hand market. Both of these practices can 
break the closed-loop cycle needed for leasing to provide its benefits. Additional problems 
include the fact that some products - such as inexpensive goods and short-lived consumables 
- are not seen as compatible with leasing. In this regard, products may need months or perhaps 
years of redesigning or rethinking before leasing can become a profitable. 

Conclusions 

Leasing is a long-term profit strategy that demands long-term thinking. Customer needs and 
desires must be ascertained, insurance and liability issues must be addressed, employee training 
must be ongoing, and an incentive must be provided for customers to return leased products to 
the lessor after use. When these issues are ignored, the demands of EPR legislation (Extended 
Producer Responsibility), which requires manufacturers to take back their products (including 
packaging) after use or face legal consequences, can be more difficult to achieve. With careful 
forethought and planning, however, and under the right circumstances, leasing has proven to be 
a good way for companies to move closer to sustainability while lowering production costs, 
increasing revenues, and decreasing waste. 



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10. Cooperative Networking 



In Scotland, a construction business asks for (and receives) the ash waste from a nearby 
coal-fired electric plant, which it uses to manufacture building materials. In Australia, a building 
designer teams with a rival architectural firm, a renewable energy supply business and a 
construction company to create affordable, energy efficient homes. In the United States, a 
business that produces merchandise from wood enters into talks with a plastics injection firm to 
discuss recyclable packaging ideas. Further north, a consortium of northeastern and mid- 
Atlantic states create a cap-and-trade programme to curb carbon emissions. What in the world 
is going on? 

Cooperating Businesses 

Anyone who thinks sustainability is about being independent could not be more wrong. 
With increasing frequency, businesses (and governments) are discovering that by working 
together with carefully chosen partners each can accomplish what was impossible for just one on 
its own. This is particularly true with small businesses that need help with large-scale projects or 
those that lack the funding to take on more sustainable activities. The term used to describe this 
is cooperative networking. 

The notion of working together to achieve a common goal has been around for thousands of 
years and is similar to cooperatives, co-ops, or collectives, in that a group of individual entities 
join together to undertake an activity for the mutual benefit of all. One or more businesses can 
combine forces with either a competitor or a seemingly unrelated business (or both) to work 
together on a temporary or permanent basis. Not long ago, I conducted a survey in 14 countries 
which revealed that 42% of the small business operators questioned had at one time or another 
joined with other businesses (including competitors) in order to maximise profits. 7% of those 
who had not said they would like to do so in the near future. 1 

For the most part, the reason for joining a co-operative network is because going it alone 
requires considerable cost, effort and risk - all of which can be reduced when others get involved. 
In practice, the number of businesses co-operating together can range from two to over 100. 
Common goals include: 

- joint purchasing projects (purchasing materials in bulk as well as purchasing capital- 
intense machinery, tools, production facilities, and/or solar panels and wind turbines), 

- sharing resources and skills (sharing equipment or facilities, or pooling information, 
expertise, or systems), 

- identifying and researching market opportunities (finding and tapping into customer 
bases previously not considered or combining one or more products or services with those 
of another business), 

- banding together to ask suppliers to produce sustainable or eco-friendly products and 
materials, 

- combining marketing resources and expertise (promoting the services and products of 
cooperative partners in advertising schemes, trade shows, and promotional schemes), 



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- combining logistics and operations (offering coordinated deliveries, designing new 
products, services or event packages, improving production capacity by sharing production 
lines, and so on), and, 

- creating reuse or recycling programmes (e.g.: pooling waste to collect enough to make 
recycling feasible) and/or using the waste or discharge from one business as a raw material 
in another. 1 

Getting Over the Hurdle 

The notion of cooperative networking often becomes more palatable once it's understood that 
cooperating is not about giving away trade secrets or merging with another business. Rather, it's 
about working with others in a complimentary fashion. The idea is to enhance the 
competitiveness of members, reduce costs, create new capital bases, increase advantages of scale, 
scope, and speed, and open up new markets. For example, the Recycled Products Purchasing 
Cooperative operating out of Encinitas, California works to promote the use of recycled paper in 
both the public and private sectors by running a purchasing cooperative that offers members 
information on services, prices, shipping, and the cost benefits of reusing paper waste. 

As with most 'new' business practices, joining a cooperative network requires a different way 
of thinking - one that debunks the traditional go-it-alone business mind-set, which dictates that 
every company must supply its own research, product design, marketing, office support, supply 
routes, financial functions, production processes, and management. For example, many 
agricultural producers have discovered that by working together they can purchase and share 
expensive planting and harvesting equipment, decide which crops should be farmed, work to 
reduce water usage, and even set a fixed price for wholesalers. This prevents having to needlessly 
compete against other growers. It also lowers costs, decreases risk in the marketplace, and 
ensures a fair outcome for each participant. The reported success and stability of cooperative 
networks, however, is perhaps the most enticing factor to those that join. Although cooperative 
networks are not infallible, businesses that cooperate are more apt to satisfy social and 
entrepreneurial objectives, avoid ethical and legal lapses, and, in general, be more economically 
vigorous and competitive, especially against larger rivals. 2 

What Type of Businesses Prosper Most? 

The foremost indicator of a successful business network is a common purpose. For example, 
the Tokyo Metropolitan Government's 'Municipal Environmental Protection Ordinance' in 
Japan developed a series of cooperative networks one of which involves a shared delivery system 
enjoyed by 15 different retail companies. By consolidating deliveries to the 30 stores owned by 
the 15 companies, the network reduced the amount of delivery vehicles on Tokyo's roads by 
50%, which eased traffic congestion and reduced carbon emissions by 4,000 tons per year. 

Getting Started 

How do networks begin? Two methods seem to dominate. The first method uses a third 
party such as a business development centre or a chamber of commerce to bring different 
entities together and propose working in unison. The Chamber of Commerce in Henrietta, New 
York, for example, initiated an education and assistance programme with the Audubon 

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International Sustainable Communities Programme to help foster energy and waste reduction 
programmes between local government, business, and the community. The San Francisco Bay 
Area Green Business Programme offers similar networking support. 

The second approach to the creation of a network is more personal and involves the 
introduction of two or more like-minded businesspeople at a social gathering or a personal 
agreement between long-term acquaintances. Either way, the ingredients for a successful 
cooperating network revolve around mutual interests (and trust) combined with a 
can-do attitude. 

Advantages and Disadvantages of Business Networks 

Of course, not every cooperative network is filled with sunshine and smiles. As with any 
group endeavour, cooperative networks are susceptible to people problems. For example, a 
network can collapse when a key player leaves or if members grow too like-minded and become 
immune to new ideas and new ways of thinking. Similarly, networks can contain some 
participants who take more than they give or there might be a general falling out between 
individuals that results in the taking of sides. Claims have also surfaced, which state that 
business networks can take a great deal of time to make decisions. 

Supporters counter these arguments by insisting that it is easy to dismiss unproductive or 
disruptive participants and that the more brains that are brought to the table for the purpose of 
making a decision the better the resolution. Moreover, proponents of co-operative networking 
say that once decisions are made they are often carried out quicker and with more enthusiasm 
than those made in big corporations. This is because commitments and involvement tend to be 
stronger when they come from people who share a mutual interest and reach an agreement 
together. By most accounts it appears that cooperative business networks operate under much 
the same principles, and therefore need the same forms of maintenance, as those required by 
teams. Additional advantages include: 

- The establishment of improved communication pathways (if communication pathways are 
nurtured and encouraged). 

- Increased human development and innovation (from the sharing of skills and 
experiences). 

- Better long-range planning and experimentation due to the spreading of financial risk. 

- The satisfying of social needs (i.e.: cooperating business owners and managers do not 
feel alone). 

- An increased feeling of openness and learning, which is fostered by a genuine interest in 
what other members have to offer. 

- Strength in numbers. 

- Increased feedback from customers, employees, and participants (usually because 
cooperating partners demand it). 

- Improved problem solving due to in-depth discussion and implementation - particularly 
when it comes to servicing niche or specialised markets. 



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- Improved motivation (ample research shows that close personal business ties heighten 
empathy and increase altruistic behaviour 3 ). 

The Rules of Cooperative Business Networking 

Most cooperative business networks rely heavily on relationship building. In other words, the 
same elements that create and foster human relationships (honesty, communication, straight 
forwardness, integrity, wisdom, honour, etc..) appear to be no different from those needed to 
maintain successful business relationships. Unfortunately, with marital divorce rates as high as 
50% (or more) around the world, many people seem to be in the dark when it comes to 
relationship building. Perhaps the expectation is that a good relationship can unfold on its own 
with no real effort from the parties involved. The following suggestions have been designed to 
help avoid problems: 

1. Be prudent and careful as to whom you wish to do business with. Check the backgrounds 
of proposed partners and consult with others before shaking hands or signing on a dotted 
line. 

2. Be a good partner. Instead of adopting a single-minded 'what's in it for me' attitude, 
balance the needs of your business against those of cooperating partners. 

3. Be honest and sincere. Always try to exceed the expectations of your partners. Never 
innate your business's abilities and never steal ideas or clients from cooperative partners. 

4. Take the initiative. Rather than wait for partners to come to your aid, be the first to plan 
meetings, raise issues, tackle problems and introduce needs. 

5. Stay committed. Enthusiasm, or the lack of it, is both contagious. Offer referrals and 
information on a regular basis. Such actions tend to ensure that partners reciprocate 
in kind. 

6. Be reasonable. Co-operative business networks are professional relationships and should 
not be considered as friendships. Keep partners close yet still at 'arm's length'. 

7. Before joining a long-term cooperative business venture test run the partnership by 
partaking in one or two short-term preliminary projects. 



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Lean thinking (also known as lean manufacturing) is a business philosophy that demands the 
total and systematic elimination of waste from every process, every department, and every 
aspect of an organisation. With lean thinking, waste is defined as the use or loss of any resource 
that does not lead directly to what it is that customers want - and what customers want, say the 
advocates of lean thinking, is value. Any act or process in a business that a customer would balk 
at paying - or any process or act that can be eliminated without the customer noticing the 
difference - is often interpreted as having no value in lean-thinking. 

The Dell Computer Company provides a good example of a company that embraces the 
lean-thinking concept. Dell became a computer-manufacturing powerhouse by allowing 
customers to personalise their purchase before a sale was made. In other words, Dell produced 
its products after it received a customer order. Before it decided to branch out into retail 
markets, Dell had a paying customer for every product it sold. No expensive inventory of 
computers was stacked away in a warehouse awaiting transportation nor were any shop shelves 
filled with unsold products. Dell never got stuck with an unsold computer because only what its 
customers asked for was ever made. From the onset, one of Dell's major production expenses 
involved maintaining a supply of parts to manufacture its products, but since these parts are 
designed for use in a variety of configurations every single one is always used sooner or later. 
Along with a focus on made- to-order merchandise, this allowed the company to decrease its 
overheads and concentrate on client-oriented matters 1 - all of which are hallmarks of 
lean-thinking. 

The Wasteful Practices Inherent in Businesses 

According to the Cardiff Business School, only 5% of most business production operations are 
comprised of activities that directly relate to what customers want in a product or service. 2 This 
means that up to 95% of the activities in most businesses add no customer value at all. 

Activities classified as 'non-value' can be split into two categories. The first, 'necessary, but 
non-value adding activities', constitutes as much as 35% of most organisational work and is 
comprised of actions that do not directly contribute to what customers want in a product (e.g.: 
payroll, behind the scenes cleaning, the fulfillment of government regulations, and so on...). The 
second category, 'non-value adding activities', can comprise up to 60% of work activities, yet 
these activities add no value to customers in any way, shape, or form (e.g.: production line snags, 
waiting periods, unnecessary paperwork, end-of-line quality inspections, etc). The aim of lean 
thinking is to find and eliminate the wasting of time, labor, materials, and money in 
both categories. 

The Origins of Lean Thinking 

Lean manufacturing goes back a long way. In 1926, Henry Ford was reported to have said 
that one of the greatest accomplishments in keeping the price of his automobiles low was the 
shortening of their production cycle. The longer a product takes to manufacture, and the more 
it's moved about, he said, the greater the cost. 

After the Second World War, Eiji Toyoda (of the car company that bears his family's name) 
took Ford's words to heart. Toyoda visited American car manufacturers to learn about their 
production methods and returned to Japan intent on practicing what he had learned. With the 

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assistance of his colleagues, Taiichi Ohno and Shigeo Shingo, Toyoda spent years refining and 
continuously improving upon waste reduction. Eventually he hit upon the idea of trying to 
eliminate all the non-value tasks in his business for which customers were not willing to pay. 
Ohno in particular, became so good at eliminating waste while streamlining operations that the 
concepts and techniques he developed are now widely known as TPS (the Toyota Production 
System). Having witnessed American supermarket systems in the United States, Ohno came to 
realise that the scheduling of work should not be driven by production targets, but rather by 
sales. TPS concepts and techniques have since been reintroduced back into America under the 
umbrella of lean-thinking or lean-manufacturing. 3 In service firms such as banks, restaurants, 
hospitals, and offices, lean-thinking concepts are referred to as lean enterprise'. 

It is worth noting that in the mid-1990s Toyota more or less abandoned its model of focusing 
almost solely on solving customer issues and instead decided to embrace a common view in 
business (and business schools) that 'if you're not growing you're failing' and that being biggest 
is best. The subsequent strategy the company developed of borrowing huge amounts of money 
to become number one in production, thereby making itself vulnerable to steep declines in 
demand, is not the lean way. 6 It has been said that Toyota is now returning to lean strategies. 

Why Go Lean? 

According to James Womack and Daniel Jones, authors of the book Lean Thinking: Banish 
Waste and Create Wealth in Your Corporation 4 , the lean process is highly supportive of human 
dignity and begins by reassuring employees that no jobs will be lost. Once that fear has been 
eliminated companies have been known to enjoy 400% increases in production and 400% to 
1,000% decreases in delays, inventories, accidents, defects, errors, and scrap. Womack and 
Jones go on to claim that if a business cannot: (1) quickly reduce its product development time 
by half, (2) cut its order processing time by 75%, and, (3) decrease production times by 90%, 
then the business is doing something wrong. 

Why does Lean Thinking Elicit Strong Emotions? 

Lean thinking contradicts a number of established production theories taught in business 
schools because it advocates making a shift from conventional 'batch and queue' production 
practices (i.e.: the mass production of large lots of a product based on anticipated demand) to a 
'one-piece flow' system that produces products in a smooth, continuous stream based on 
customer demand. 5 This means that customer wants must first be identified before 
manufacturing begins. Customer demand then 'pulls' a product or service through the 
manufacturing process rather than having the business push its mass-produced goods onto the 
market. Anything that does not contribute to the pull of customer demand is considered waste. 

Typical Forms of Waste 

Aichi Toyoda and his colleagues originally identified seven common forms of waste, but over 
time two more have been added. Today, the nine forms of waste that lean manufacturing seeks 
to reduce or eliminate are: 



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1. Over Production: which is defined as producing more information or product than a 
customer requires, or making the product or its components earlier than is required, or 
making it faster than required. 

2. Waiting: the time spent waiting on materials or information. 

3. Moving Items: needlessly shifting, storing, stacking, or filing materials and information, or 
needlessly moving people, materials, and/or information from one point to another. 

4. Over-Processing: the time and effort spent processing information or material that does 
not add value to the product (e.g.: unnecessary paperwork or employees and managers 
seeking approvals). 

5. Inventory: any and all materials or information awaiting processing. 

6. Unnecessary Motion: any activity that does not add value to a product or service. 

7. Defects: the unnecessary repairing, scrapping, or re-working of material or information. 

8. Employee Resistance: the political posturing, stalling, or passive resistance taken by 
employees in the hope that 'this project will also soon pass'. 

9. Under-utilising People: not involving all employees and not using everyone to their 
full potential. 6 

Starting the Journey 

Lean thinking is based on five principles that must be thoroughly understood and agreed 
upon before work can begin. They are as follows: 

1. Specify what the customer defines as value. Anything that does not add value from a 
customer perspective should be reduced or eliminated. 

2. Draw up a value map. A value map is much like a process map with one distinct difference: 
a value map starts from the customer end and makes a clear distinction between value- 
added activities (transformational activities for which the customer is willing to pay) and 
non-value-added activities (activities that add cost without adding customer value). 

3. Place all value-creating steps in a tight sequence so the product flows smoothly toward the 
customer. On the shop floor, this may involve moving machines and equipment into a 
tight assembly-line sequence to minimise material and product movements. An additional 
explanation of this stage is often explained via the '6-S' model below. 

- Sort - Determine exactly what employees need to create customer value (tools, equipment, 
supplies, materials, etc). Eliminate all other clutter. Tools, production equipment and 
information systems should be right-sized so they produce exactly what is needed - no 
more, no less. 

- Stabilise (or Set-in-Order) - Place tools, equipment, supplies, and materials in logical 
sequences where they are needed rather than in off-to-the-side areas (in lean-thinking 
terminology this is called Point-Of-Use-Storage or POUS). Employees must take part in 
ensuring that the design, selection, correction, and maintenance of every machine, tool, 
and process is accurate and ready to perform without interruption. 

- Shine - Inspect work areas and eliminate physical barriers so that everyone can see 
(literally) what is going on. This allows for further introspection and observation. 

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- Standardise - Reduce all variations, integrate processes, use standardised parts and 
materials where appropriate, establish uniform delivery schedules, make performance 
measures transparent, and empower each manufacturing unit so that it has the capability 
to produce exactly what is required without having to move along multiple work centers. 

- Safety - Develop and maintain a strict adherence to safety concerns, teachings, 
and practices. 

- Sustain - Enforce a continuous commitment to change with robust planning, regular 
inspections, much patience, trial-and error allowances, and a good reward and 
recognition programme. 

4. As flow is introduced, let customers pull value from the next upstream activity. While 
wasteful activities are being reduced or eliminated, shift the business's efforts toward 
letting the customer determine production quantities. Remember, the point of lean- 
thinking is to create an enterprise that is responsive solely to providing what paying 
customers want, when they want it. No more, no less. This type of setup demands: 

- the building and maintenance of strong relationships with customers and suppliers, 

- a streamlining of entire systems — not just parts of the system, 

- the removal or re-assigning of anchor draggers (people or processes that slow 
down operations), 

- immediate results from everyone, 

- informing people that two steps forward and one step backward is okay; no steps forward 
is not okay, 

- the circulation of lean thinking strategies in every department and procedure, 

- the creation of a lean accounting system, 

- paying employees in relation to their performance, and, 

- asking suppliers and customers to also think lean. 

5. Keep going. Just as with quality and efficiency, there is no finish line associated with 
lean- thinking. Never stop observing, analysing, questioning, and improving. 1,3,5 

Ready to Begin? 

Many experienced lean thinkers suggest kick-starting the lean process via the following: 

1. Find a leader who is willing to take responsibility for the lean transformation. 

2. Research lean-thinking practices and inform everyone about them (i.e.: initiate a training 
programme). 

3. Find a change agent (a wasteful practice or a bottle-neck area) or locate (or create) a crisis 
for which action must be taken, or select a pilot project and run it for a few months during 
which time you can evaluate, review, and learn from, your mistakes. 

4. Involve others and begin making changes as soon as possible. Don't procrastinate and 
don't waste time establishing any grand plans. Just do it. 



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The Role of the Manager 

According to lean-thinking advocate Jim Womack, the manager's role in lean thinking is to 
eagerly embrace the role of problem solver. This means visiting actual situations, asking about 
performance issues, seeking out root causes, and showing respect for lower-level managers (as 
well as colleagues) by asking hard questions until good answers emerge. Most importantly, the 
lean manager realises that no manager at a higher level can or should solve a problem at a lower 
level (Womack calls this one of the worst abuses of lean). Instead, the role of the higher level 
manager is to help the lower-level manager tackle the problem through delegation and dialogue 
by incorporating everyone involved with the problem. The lean law of life is that problems can 
only be solved where they exist, in conversation with the people whose actions are contributing 
to the problem (which requires support, encouragement, and relentless pressure from the higher 
lean manager). The lean manager also realises that all problem solving is about experimentation 
by means of plan-do-check with the expectation that mistakes do happen and that experiments 
yield valuable learning that can be applied to the next round of experiments. Lastly, the lean 
manager knows that no problem is solved forever. New things generally introduce more 
problems - which is necessary to enable probing minds to continue the perfection process. 

Lean Thinking Weaknesses 

Despite much positive press, lean-thinking has inherent weaknesses (both physical and 
behavioural) that must be prepared for. The good news, advocates say, is that these weaknesses 
can be avoided if addressed in advance. 

Physical weaknesses include making lean changes in production when: 

- The design of the product or service is not ideal, 

- The product or service is not economical, 

- Customers are not satisfied with the current design of the product, and, 

- The product's configurtation does not fulfill the functional requirements of the market or 
the consumer. 

Behavioral weaknesses include: 

- Management does not support and nourish change, 

- Measurement is not taking place, 

- Lean thinking methodology is seen or addressed as a tertiary or secondary issue, 

- Managers and employees are not rewarded for the improvements they make, and, 

- The values of the business are not in sync with lean- thinking concepts (Nave, 2002) 7 



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Lean-Thinking Summarised into Ten Concise Steps 

1. Eliminate waste. 

2. Minimise inventory. 

3. Maximise flow (streamline processes). 

4. Determine and meet customer requirements. 

5. Pull production from customer demand. 

6. Do everything right the first time. 

7. Empower workers. 

8. Allow for changes to be made rapidly. 

9. Partner with suppliers. 

10. Create a culture of continuous improvement (AHRQ, 2007). 8 

For more information about lean thinking visit the Lean Thinking Institute at: www.lean.org. 
The international arm of the Lean Thinking Institute is located at: www.leanglobal.org. 



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PEOPLE 



Sustainability is not a technological issue. At its core it is a 
behavioural issue and as such it is dependent upon teamwork, 
co-operation and motivation. For sustainable practices to take root 
and produce results, every employee - whether he or she is a 
cleaner, a production line worker, or an administrator - must 
contribute to the process (even paying customers). No matter 
what level or experience a person has, everyone has the potential 
to discover a sustainable path that has been overlooked. Just as 
important, any employee has the ability to add that final jolt of 
effort that avoids failure and promotes success. Understanding the 
importance of people in all phases of the sustainability process is 
necessary to ensure that a thorough and combined effort on all 
fronts is made 



Simply put, people are a business's ultimate competitive advantage. 



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12. Understanding The Importance of Customers 

To understand how important customers are to sustainability, it is first necessary to define 
the word 'customer'. In business, a customer is everyone that an organisation serves. Look 
carefully at this definition because it includes everyone involved in the business - not just the 
folks whose money is taken in exchange for a product or service, but also the people who serve 
these individuals. Customer transactions are a two-way exchange. Every paying customer wants 
something from the business that has a product or service that is wanted and the business 
wants something from paying customers in return (money). Similarly, every employee wants 
something from the business he or she serves (wages, training, respect) and every business 
wants something back from its employees (skill, labour, loyalty, honesty). This two-way, 
give-and-take service scenario allows the word 'customer' to be classified into two categories: 

- External Customers: the people that exchange money for a product or service, and, 

- Internal Customers: the individuals that are employed by, that use, or who rely on the 
work of others within an organisation to perform responsibly (including employees, 
suppliers, contractors, shareholders, the community where the business is located, and 
other stakeholders). 

Back to Basics: The Ten Commandments of Business Success 

One of the better ways to understand the importance of customers is the '10 Customer 
Commandments' list, which can be traced back to Mahatma Gandhi. He reportedly taught 
them to his law clerks. Think of each in relation to internal and external customers and 
two-way service: 

1. Customers are the most important people in our business 

2. Customers are not dependent on us - we are dependent on them 

3. Customers are not to argue or match wits with 

4. Customers brings us their needs - it is our job to fill those needs 

5. Customers are not an interruption of work - they are the purpose of it 

6. Customers do us a favor when they call - we do not do them a favor by serving them 

7. Customers are part of our business - they are not outsiders 

8. Customers deserve the most courteous and attentive treatment we can give them 

9. Customers are the individuals who make it possible to pay our wages 
10. Customers are the lifeblood of this and every other business 

Going Green and People 

Although being more environmentally friendly is an admirable way to conduct business, as 
we have seen 'going green' represents only one component of the overall sustainability picture. 
That being said, the value of 'green' markets is estimated to be worth around $600 billion. 1 
Wal-Mart began introducing green versions of several of its products several years ago to test 
this market and gauge customer reactions. The conclusion? Consumers are indeed 'embracing 
products that help the environment'. 2 Note that this does not mean that going green is a 
guaranteed ride to success. Early findings suggest that the following issues should 
be addressed: 3 

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- Keep prices down. Extra costs associated with going green (if there are any) can usually be 
offset by making production processes more efficient and sustainable - which means 
reducing the expenses associated with toxic or hazardous production processes (e.g.: 
specialised transport requirements, health and safety costs, specialised equipment needs, 
and expensive waste disposal bills). 

- Focus on quality. Many successful green business practitioners suggest that the overall 
quality of a green product should be improved before announcing its virtues. In other 
words, improve the reasons why customers purchase the product rather than hoping that 
'greening' it will make it more appealing. 

- Incorporate new green products into a traditional product line. By adding a green 
alternative alongside traditional product lines it becomes easier to enter the green market, 
learn the needs of consumers, overcome mistakes, and gather information and ideas for 
further improvements. 

- Make small changes first. Many consumers still believe that environmentally safe 
products don't work as well as conventional products. This is largely a legacy of the 1970s 
when such charges were usually true. To offset this hangover, some organisations 
advocate being modest when announcing greenness and to refrain from announcing any 
green intentions until after an improvement in quality has been detected by consumers. 

- Be upbeat. Avoid doom-and-gloom messages in green product advertising. Most 
consumers are turned off by negative messages and, as rule, respond better to 
positive messages. 

- Seek out a bona fide green accreditation. More government agencies, consumer 
organisations, and environmental groups are issuing certifications to bolster the 
credentials of green products. 

- Green the place where your product is sold. Minimising waste not only reduces costs, it 
also leads to increased sales. For example, a small grocery business in California named 
Vic's Market cut its annual energy bills by $48,000 (and its carbon emissions) after 
adopting basic efficiency practices. An added bonus was an increase in sales due to 
brighter, energy efficient lighting and the covering of food freezers with glass doors, which 
made interior temperatures more comfortable. As a result, customers shopped longer. 
Elsewhere, retail giant Wal-Mart fitted half of one of its stores in Lawrence, Kansas with 
energy efficient skylights and the other half with fluorescent lights - then watched with 
astonishment as sales rose substantially on the naturally lit side. 4 

Jobs, Sustainability and People 

Job security and job creation undoubtedly fare better when businesses cut unnecessary costs 
and make money. Obviously, no one wants to work for a company that is going to give them a 
pink slip through no fault of their own, but is job security sustainable - particularly during a 
recession? Laying-off workers is a time-honoured practice undertaken by many companies to 
survive difficult times, but the bottom line is that making workers redundant costs money. A 
study conducted by Bain & Company (featured in the April 2002 issue of the Harvard Business 
Review) concluded that when a job is refilled within six to eighteen months of a lay-off the 

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business loses money on the deal 7 (see also, 'Lay Off the Layoff's by Stanford University 
professor Jeffrey Pfeffer, Newsweek, Feb 5, 2010) Expenses include severance package costs, 
declines in productivity and quality, rehiring and retraining costs, and poor morale suffered by 
those left behind. Fortunately, there are better, more sustainable ways to treat people and get 
the most out of them in the bargain. For example, nine companies recently featured in Fortune 
magazine's '100 Best Companies to Work For' list (2009) have never laid-off an employee - ever. 6 
These companies - and their strategies - include: 

- Publix Super Markets. A strong balance sheet with no debt helped the Publix grocery chain 
acquire 49 stores and hire over 1,250 people in 2008. In its 79 years, Publix has never 
laid-off a single employee - mostly because every employee owns a stake in the company. 

- The Container Store, a storage retailer based in Coppell, Texas, froze salaries and watched 
its spending during 2008 to avoid layoffs. This strategy enabled it to expand operations in 
the midst of the recession by opening four stores and adding 70 employees to its roster. 

- Aflac, based in Columbus, Georgia (USA), sells supplement insurance. Suggestions from 
employees that keep the business going (and save it millions of dollars) include 
telecommuting and flexible schedules. In return for their input, employees receive 
benefits that include onsite gym memberships, childcare programmemes and job security. 

- Nugget Market in Woodland, California avoids layoffs with careful job placement and 
shrewd labour management. Instead of handing out redundancy notices during hard 
times, the 81-year-old grocery store refrains from replacing employees who leave. Since its 
worksites are fairly close to one another, employees are trained to perform many different 
duties, which makes temporarily vacant positions easy to fill. In 2009, despite a worldwide 
recession, the company filled 173 jobs, a 22% increase in job growth that year. 

- Southwest Airlines, the only American airline that has never had an involuntary layoff in 
its 40 year history, is now the country's largest domestic airline with a market 
capitalization bigger than all its domestic competitors combined. 'If people are (a 
company's) most important asset,' says the airline's former head of human resources, 'why 
would you get rid of them? 

As these examples show, engaging employees to find ways to cut costs and increase 
profits (instead of throwing them overboard when difficulties arise) can be both winning 
and sustainable. 

Work Environments, Sustainability and People 

Over the past 10,000 years, sunlight, fresh air, and natural settings have greatly influenced 
human evolution; so it should come as no surprise that artificial settings - combined with 
industrial noise - have been shown to adversely affect human productivity and performance. 
For example, studies show that workers labouring in windowless factories experience more 
headaches, faintness, and sickness compared with workers who toil under natural light. 
Additional studies have revealed that prolonged exposure to artificial light decreases antibody 
activity, increases infections and colds, and results in depression. 8 Creating workplaces that 
reduce these impediments must therefore be considered an integral part of sustainable work 
practices. For example: 

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- Lockheed Martin reported saving half a million dollars on its energy bills and enjoyed a 
15% reduction in absenteeism after moving its offices to a building lit by natural light. The 
company subsequently saved hundreds of thousands of dollars every year on energy costs 
and discovered, much to its surprise, that a 2% increase in productivity equates to $3 
million extra per annum. This increase in productivity alone paid for the new building in 
less than one year. 

- The Boeing aircraft company and Prince Street Technologies (PST) introduced natural light 
into their workplaces and watched as their quality control systems improved. Specifically, 
at Boeing, tool measurements could be read easier, previously unseen cracks in fuselages 
were detected, and subtle shades of colour were better differentiated. At PST, the 
introduction of natural light was so successful it reduced worker compensation cases 

by 90%. 

- The Diagnostics Products Corporation in Flanders, New Jersey saw employee productivity 
increase 19% after the installation of an efficient climate control system and the addition 
of skylights that 'let in lots of (free) natural light.' 10 

- By installing skylights and additional insulation to improve lighting and temperature 
control, Verifone's credit card verification facility in Costa Mesa, California, decreased 
energy consumption 59%, reduced absenteeism by 47%, and boosted productivity 5-7%. u 

- At the headquarters of the West Bend Mutual Insurance Company in West Bend, 
Wisconsin, efficient workstation controls, which allow employees to alter temperature, 
airflow, lighting, and noise based on their personal preferences, contributed to a 15% 
increase in claims processing per employee. 11 (For more on this topic, see the Place section 
of this guide) 

A Word about Bad People 

In November 2009, lean-thinking guru Jim Womack described in a newsletter an experience 
he had while touring a large service company. During the visit, his hosts complained about the 
people in another department and how they were dragging their feet in response to needed 
change. Sometime later, in a different area, another team moaned about the resistance being 
generated by the finance department over the same changes. At some point, Womack asked his 
hosts if the way changes were being made benefited the two departments where the 'bad people' 
were located. And the answer, after a bit of discussion, was obviously 'no'. Indeed, it quickly 
became clear that those offering resistance were, in fact, reacting quite rationally to protect their 
interests. Since the end result of the changes being requested would eventually end up 
benefiting everyone, Womack explained that the real problem was not the change itself, but 
rather a lack of discussion, inclusion, and negotiation in which winners could compensate those 
who saw themselves as losers in order to make everyone whole. Think of this story as a parable 
in regards to internal and external customers and the problems encountered when managers 
choose to think by themselves and broadcast edicts rather than work collaboratively with others. 

The People at the Bottom of the Pyramid 

Eliminating the wastage of people is as much a part of sustainability as reducing physical 
waste. Consider then, that the world's largest consumer markets - upwards of two-thirds of 

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humanity - are comprised of poor people that are either ignored or forgotten by most businesses 
because of tradition, ignorance, or prejudice (see FIGURE 12-1). Much to their credit, however, 
an increasing number of companies have discovered that poor people, if given a chance, 
represent an economic force unto themselves. 'Inclusive business' is the term used to describe a 
company that works to include 'bottom-of-the-pyramid' (BoP) customers in its business model. 
The key to tapping into this powerful economic base is local partner selection. Many BoP 
companies don't become successful by simply selling products to the poor. Successful inclusive 
business strategies rely heavily on embedded processes that include working with and/or 
helping to create intermediary businesses that bring local and outside companies into close 
personal relationships with BoP communities. 

Figure 12-1 

The global economic pyramid 

Adapted from C. K. Prahalad and Stuart Hart: The Fortune at the Bottom of the Pyramid Strategy + Business (2002) 



Number of people: 

800,000,000 

Annual purchasing power parity in US : 

> $15,000 



Number of people: 

1,500,000,000 

Annual purchasing power parity in US i 

$1,500-$15,000 



Number of people: 

4,000,000,000 

Annual purchasing power parity in US $ : 

< $1,500 




The Bottom of the Pyramid 



Three Examples 

In 1998, the Cemex cement manufacturing company in Mexico sent a team of managers into 
one of the poorest areas of the country to conduct a six-month study on how to increase sales. 
People with limited incomes accounted for around 40% of Cemex's cement sales so the company 
wanted to learn how best to serve what they suspected was a virtually untapped market. After 
living amongst this customer base and learning its needs, the Cemex team discovered how poor 
people used cement, how they could pay for it, and a host of other profitable facts, which they 
then used to make their products more accessible. A savings organisation named 'Patrimonio 
Hoy' was then set up to finance the selling of Cemex products to the company's new customer 
base. Sales subsequently grew 250% yearly 5 

Cemex's story is not unique. In 2006, the Nobel Peace Prize was awarded to Mohammad 



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Yunus, a former economics professor from Bangladesh who invented the concept of micro- 
finance (giving small loans to poor people so they can start their own businesses). Although 
Yunus was repeatedly told by the establishment that poor people could not be trusted with 
money, his research (and his conscience) suggested otherwise. Yunus's solution was to help 
poor people help themselves by creating a new financial institution called the Grameen Bank 
(grameen means village). Currently, the Grameen Bank provides over $445 million in small 
loans each year ($10 to $50 at a time) to those who need it most. It operates by visiting its 
customers rather than having them come to the bank. Far from being unable or unwilling to 
pay back their loans, those that borrow money from the Grameen Bank pay back their 
borrowings at a higher rate than any other group of borrowers in the world. 

Realising that he was on to a good thing, Yunus next helped a telecom company called 
GrameenPhone (from an idea conceived by former investment banker Iqbal Quadir) to adapt 
the selling of mobile phones to fit another wasted market. Basically, GrameenPhone sells 
mobile phones to villages rather than individuals. Selling phones to villages helps spread the 
cost of the phones, thereby enabling more people to receive information about crop prices, 
market conditions, and other vital statistics without wasting days walking back and forth to 
major communication hubs. The result? Profits from the GrameenPhone project are expected 
to rise to over $100 million despite the fact that the company operates in a region of the world 
where the average yearly wage is only $286. 

Meanwhile, in Central America, Corporacion Dinant is producing biodiesel from African 
Palm trees, which have low water needs and require intensive manpower - a situation that 
provides excellent opportunities for job creation (currently 2,000 small producers are involved 
in the project). 5 

The message of BoP economics is not about selling products to people who don't need them. 
Rather, the point is that companies - particularly global players - should not turn their backs on 
BoP opportunities in their search for new markets, new products, and new business partners. 
Businesses astute and creative enough to adapt to the needs of the world's largest collection of 
potential customers are currently reaping the benefit of increased profits, improved regional 
economic stability, and intense personal satisfaction - with little or no competition. For more 
information see: The New Age of Innovation: Driving Co-created Value Through Global 
Networks by C.H. Prahalad and M.S. Krishnan (McGraw Hill, 2008) and Capitalism at the 
Crossroads: Aligning Business, the Earth, and Humanity (2 nd Edition) by Stuart Hart (Wharton 
School Publishing, 2007). 

The Final Word on People 

Nothing is as crucial to a business as customers - both internal and external. With few 
exceptions, the role of every business is to serve customers what they want, where they want it, 
and the way they want it. No business should ever lose sight of the fact that every decision it 
makes and every action it takes must be customer oriented. Anything else is a complete and 
utter waste of time, money and resources. Period. 



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13. Managing Change 



Change is never easy. Just ask Amy Spatrisano, principle and cofounder of Meeting Strategies 
Worldwide (an international meeting and event organiser). Some time ago, Amy took a look at the 
number of everyday items used during a typical five-day conference and found that 2,500 
attendees used and discarded over 62,500 plates, 85,000 napkins, 75,000 cups and glasses, and 
90,000 cans and bottles. Determined to eliminate this (and other) waste, Amy did some research 
and discovered that using online registration could eliminate paper, printing, and postage costs, 
thereby saving $3,900. Not providing conference bags could save $11,700. Avoiding presentation 
handouts saves $1,950 in printing and paper. Providing water in pitchers instead of plastic bottles 
saves $12,187. Serving condiments in bulk rather than in individual packages and eliminating the 
need for buses by choosing hotels close to the convention center provided additional savings, all of 
which amounted to more than $60,000. Unfortunately, as Amy later lamented, many of the 
meeting planners, hotels, caterers, and other businesses she works with remain unimpressed by 
these figures. 'Even if you show them they'll save money and even if you make it easy' she says, 'it 
doesn't mean they'll do it.' 1 

This story is not uncommon. Many people and their organisations actively resist change even if 
the desired change guarantees the making of money and/or additional job security. Species that 
survive, said Charles Darwin, are usually not the smartest or the strongest, but the ones most 
responsive to change. 

Preparing for Change 

For any type of change to take hold within a business (particularly sustainability changes) 
breadth and depth is required. Breadth means that the change must take place across the entire 
organisation (e.g.: every department and/ or person must be made aware of the need for change). 
Depth means that everyone becomes involved with, and brings their skills to, the change process. 
Having employees become part owners in the change process by asking for their input is a 
powerful way to win them over. Involving employees also taps into a wider knowledge base, 
initiates motivation, and reduces the chances of something being overlooked. Just as important, 
when a change process is shared the words, 'that's not my job' are heard less often. In 2003, for 
example, Dow Chemical achieved hundreds of millions of dollars in cost savings thanks to the 
pursuit of employee-led efficiency practices at its facilities in Texas and Louisiana. As part of the 
change process, employees worked alongside managers from the highest levels of the company. 
The solutions they came up with - on their own - included identifying and fixing steam leaks, 
reducing electricity consumption, super-insulating industrial furnaces, and introducing real-time 
monitoring (i.e.:immediate feedback from mechanical processes). By involving as many employees 
as possible from a wide range of departments, Dow's on-going efficiency drives ensure that: (1) 
breadth and depth is achieved, (2) there are fewer chances that something is missed and, (3) 
problems are attacked from every angle. 2 

Probably the Most Important Management Theory Ever Developed 

An adage often attributed to Albert Einstein states that 'insanity is the constant repetition of a 
behavior with the expectation of a different result'. Consider, then, the following model developed by 
Kurt Lewin in 1951 3 (see FIGURE 13-1). Lewin's 'Force-Field Theory' states that two forces come into 
play when change is introduced into a work setting. The first force derives from those trying to instigate 
change (driving forces). The second force results from those who try to resist change (restraining forces). 

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Lewin's belief is that most managers use force to bring about change by exerting pressure on 
those who oppose them. In practice, however, the more management pushes, the more the 
other side pushes back. The result is that both sides get locked in an I'm-going-to-win-this 
power struggle hidden behind a thin veil of civility (e.g.: the way most employees push back is 
not with violence or anger, but through inactivity, excuses, and other forms of procrastination). 

The better way of overcoming resistance, says Lewin, is to get off the power-struggle merry- 
go-round and focus on why the opposition is resisting change. Almost always, the reason why 
people resist change is because they are afraid of something. Thus, the question management 
should be asking isn't, 'How can we persuade these people of our arguments for change?' (i.e.: 
'How can we force change upon them?') But rather, 'What are their fears and objections and 
how can we remove them?' 

Figure 13-1 

Lewin's Force Field Theory 

Driving Forces 
(forces for change) 



Restraining Forces 
(forces resisting change) 



Why Employees Fear Change 

Initiating change in a business can be a gut-wrenching experience. This is because in many 
instances change removes comfortable habits and protective barriers and leaves people feeling 
stranded and defensive. The following text, adapted from Creating Value for Customers 4 by 
William Band, describes the typical concerns associated with workplace change. 



Job loss 



Fear of loss of control 



Too much uncertainty 



Mention 'efficiency' or 'change' in a workplace and many 
employees immediately assume that jobs are on the line. 
That is why many change initiatives begin with the 
promise that job losses are a last resort. 

Feeling that things are being done to employees rather 
than by them 

The future is not obvious and everyday feels like the 
beginning of the end. This can lead to employees wanting 
excessive details and other procrastination techniques 
(i.e.: paralysis by analysis) 



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Too many surprises People like novelty, but hate surprises. Early warnings 

are therefore necessary to avoid unwanted shocks. 

The changing of habits Habits are easy and mindless. Change is uncomfortable. 

Need for familiarity Everybody likes what is familiar. Most people feel 

comfortable going to places and doing things they know 
are risk free. 

New things mean more work This is usually true, especially when introducing change. 

But the initial workload often subsides when new tasks 
become easier (which is often the reason for change). 

Concern for competence Whenever something new is introduced, people will 

question their ability to master new skills, particularly if 
training and ongoing support are not provided. 

No time to adjust Saying, let's do things differently' is not enough. It takes 

time for new skills to develop. Rushing through the 
change process can lead to disruption, sabotage, foot- 
dragging, and/or poor performance. 

Change from Another Angle 

Kurt Lewin later developed his Force Field Theory further (with input from Edgar Schein) by 
introducing a 'Three Stage Approach to Change Behavior'. Since good habits are recognised as 
being just as difficult to break as bad habits, the analogy the two men make is to unfreeze bad 
habits and freeze improved habits once they've been established. Here's how it works: 

1. Unfreeze existing behaviours. Gain acceptance for change by getting employees to admit 
that a change is needed. This does not mean that a decision must be made or a solution 
must be found just yet. At this stage, only a general consensus is required in which 
everyone agrees that something new has to be done. Examples of how some businesses 
get their employees to admit that waste reduction is needed is to involve them in 
estimating the amount (and cost) of the waste the business produces, analysing energy 
and fuel consumption, offering carbon emission estimates, and/or pointing out garbage 
levels and costs. Studying the cost savings achieved by sustainable businesses (particularly 
competitors) is another tactic that has produced results. 

2. Change existing behaviours. Get employees involved in the change process by asking for 
their advice and input (breadth and depth). This can be accomplished by putting together 
a team (or teams) whose job is to collect ideas. Once again, the more employees that 
contribute the more likely change will be accepted because, in effect, change will be seen as 
the employees' idea rather than management's. 

3. Freeze new behaviours. Reinforce new work practices with rewards. If this is not done, 
people will stop making progress and will revert to the safety of their old habits. 

Building the Commitment for Change (A Summation) 

George Bernard Shaw once said that to learn something at first feels like losing something. 
To eliminate the feeling of loss (and the sense of fear that loss creates), try the following: 

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- Involve as many people as possible. Participation leads to ownership, enthusiasm 
and motivation. 

- Emphasise that job loss is not part of the change process. Explain and show that every 
redundant employee will be reassigned and retrained. 

- Communicate clearly and often. Make the change message unmistakable and provide as 
much information as possible about every change. 

- Divide changes into manageable, comprehensive steps. Make these steps as familiar as 
possible and make them small and easy. Ensure each step is deemed a success before 
moving on to the next. 

- Never surprise anyone with change. 

- Let commitment grow. Don't ask for allegiance to new and untried ways (you won't 
get it). 

- Make clear what will be expected of people during and after changes are made. 
Communicate these standards and requirements often (i.e.: provide feedback). 

- Provide as much continuous training as needed. 

- Bear in mind that new work habits often require three to four weeks (or longer) to 
make or break. 

Learn as You Go 

Lack of experience in a change situation is not an excuse for inactivity. Indeed, most 
successful efficiency initiatives begin with a handful of individuals stepping into the unknown 
with little more than common sense, a healthy understanding of their business (and its 
customers), and an overwhelming desire to succeed. Ken Tannenbaum, a technology associate 
at Dow Chemical who has successfully led several efficiency projects, explained this concept 
as follows: 

'Most of the work on efficiency (at Dow Chemical) is done by Dow employees. We have 
utilised consultants from time to time to validate our assumptions or to give us an opportunity 
to ensure we did not miss anything, but in most of our plants, (because) the processes are very 
specific, external experts cannot bring much additional help.' 5 

Ken went on to say that the same techniques used every day to change, improve, and 
maintain Dow Chemical's numerous plants are the same techniques Dow uses to increase 
efficiency because when it comes to change there is no sense re-inventing the wheel every time. 

Just Do It 

In some businesses employees will refuse to undertake new tasks and responsibilities no 
matter what is tried. Managing change in the face of strong opposition may therefore require 
stern procedures that include disciplinary action, reassignment, or perhaps termination. Most 
practitioners agree, however, that managers should first try to stimulate change by encouraging 
employees to lead their own way through the change process. To be sure, stepping into the 
unknown is intimidating and frightening to many, but just as with life, sometimes one simply 
has to do what needs to be done while being afraid. The alternative, as the saying goes, is that if 
you continue to do what you've always done, you're likely to end up with what you always got. 

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The following team-creation recommendations have been compiled from a number of 
successful waste elimination schemes: 

1. Before putting together a team, state the company's goals. What is the current situation 
and what does the business want to achieve? Zero-percent waste? The replacement of 
toxic substances with safe alternatives? A reduction in production times? A revised 
budgeting system that charges the cost of waste to the department that creates it? 
Examine the difference between what exists and what is wanted. Assume that everything 
being examined is broken and must be improved. 

2. Keep team sizes at a manageable level. Research shows that team sizes should be limited 
to less than 10 or 12 individuals for maximum effect. Larger groupings are usually 
difficult to handle. 

3. Involve individuals who are knowledgeable about what is being examined. Input will 
probably be needed from front-line workers, suppliers, maintenance crews, health and 
safety personnel, the purchasing department, engineers, the legal department, research 
and development staff, paying customers, the community where you are located, 
environmental specialists, etc. Bring these folks on board. For example, Proctor & 
Gamble set a goal of sourcing 50% of its innovation ideas from outside the company in a 
bid to shake things up and create new ways of thinking. 

4. Do not turn away volunteers. Enthusiasm should not be curtailed and no one should be 
made to feel left out. For example, the Scandic hotel chain involved its employees in 
reducing unnecessary costs and discovered that most ideas came from the maids that 
cleaned the rooms (proving yet again that workers on the front lines often know more 
than most). 

5. Start off small. If energy saving is the goal, take a look at the company's electricity meter 
then go around and switch off all unneeded lights and equipment. Read the meter again 
and determine the savings. Multiply the daily savings by the days of the year the business 
is in operation and you'll end up with a rough estimate of how much money can be saved 
in a year just be turning off the lights and equipment you don't use. That should provide 
enough motivation to keep going (see section 24). 

6. Provide continuous communication, results verification and training. Consolidate training 
and information distributions to allow different groups to meet and communicate. 
Ensure that every employee (including shift workers) is aware of what needs to be done, 
what is being done, what has been done, and why. 

7. Agree on motivational tools. Determine how employees will be motivated. Recognition, 
extra holiday time, cash bonuses or award ceremonies are all valid motivators. In one 
business, employees wanted to be rewarded with a carrot cake baked by the wife of their 
foreman. Another business displayed team achievements on giant scoreboards (thereby 
satisfying the 'nudges' concept explained in segment 2: What the Reformer is Up Against). 
Points were generated for reducing kilowatt-hours of electricity, saving amounts of raw 
materials, reducing production minutes, and so on. Other companies tie annual bonuses 
to the waste minimisation performance of employees. 

8. Maintain links between your teams and the rest of the organisation. Learn the fears and 

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needs of the individuals involved. Be aware and share what every team is attempting 
and accomplishing. 

9. Update goals as they are achieved. Emphasise the notion of on-going, no-finish-line 
improvement, build on previous successes, and measure and track all progress no matter 
how small. Fifteen or twenty ideas that can each save 1% of costs will quickly add up. 
Let them. 1 

Organising Team Meetings 

The following issues should be discussed, agreed upon and written down before a team can 
be expected to perform: 

- The purpose of the group posted for all to see. For example, in a waste reduction scenario, 
typical questions that should be presented can include: What is the waste? Where is the 
waste created? When is the waste created? How much waste is created? What can be 
done to reduce the waste? 

- Attendance expectations. Some practitioners suggest that efficiency teams should meet at 
least two to four times a month. Whatever is decided, put it in writing and enforce it. 

- Behaviour rules. Examples include: no interruptions, no eye-rolling, no name calling and 
no criticism focused on personality rather than the task. 

- Work performance expectations. Set the standards that determine if members are pulling 
their own weight and what will be done if they are not. 

- Methods of agreement (or dissent). Will votes be cast? Will objections be listened to? 

- Clearly defined tasks and responsibilities (both general and specific). For example, inform 
every department that energy use must be cut by 10% in one month. Then let it be known 
that more such improvements will be expected. 

- Explanations that articulate how deadlock will be handled. Will lots be cast or will a coin 
be flipped? 

Ideas and suggestions should be recorded on a large display board where they can be clearly 
seen and referred to. Concentrating on positives is essential. Staying upbeat is a good way to 
build morale and reinforce individual cooperation and participation. Those who work with 
teams on a regular basis suggest countering every negative criticism with a positive suggestion 
for improvement. Negative outcomes can also be corrected with measures designed to overcome 
defeatist attitudes. These include: 

- Hold second chance meetings after a consensus has supposedly been achieved, 

- Avoid being partial to only one course of action (perhaps make it a rule to always come up 
with two or three alternatives), 

- Go around the table with team members and insist on feedback (this helps prevent quiet 
people's opinions from being withheld and big-mouths from dominating discussions), 

- Encourage team members to do their own research and collect their own facts, 

- Remember that the point of formulating a group is to produce results (i.e.: assigning 
teams is not a solution in itself), 



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- Understand that every group is unique and requires a different start-up, functional style, 
and form of leadership, 

- Assign team members to question suggestions and obtain better solutions. 2 

What to do when Efforts Slow 

Of course, not every team project story has a happy ending. Sometimes the enthusiasm and 
work of even the best teams can slow or falter. Typical comments associated with stalled efforts 
include: 'We don't have time for this', "This isn't working', "This stuff isn't relevant', or 'We're just 
treading water'. Additional examples include the development of a 'committee mentality' where 
'too much analysis leads to paralysis' and nothing gets done. Further problems can develop 
when the smug air of superiority creeps into a team or when the team refuses to consider what 
it feels are weird or different viewpoints from outsiders. As a result, contradictory data is 
ignored or shelved, other alternatives are not considered, and a jumping to conclusions or 
inactivity dominates. More often than not, this usually results from a lack of clear goals and 
leadership. Suggestions include: 

- Make sure that everyone knows what is expected of him or her and what needs to be 
done. This may involve establishing another form of readable compass that helps explain 
where the business wants to go and what it wants to do (and why) before numerical 
targets are set. 

- Make a 'to do' list. Although it may seem a bit basic, a simple list filled with clear, itemised 
tasks that can be checked off after they've been completed could be just what's needed to 
help employees focus on one goal at time and affirm that progress is being made. 

- Delegate tasks. Reward good people with additional responsibility and recognition by 
letting them come up with their own solutions. 

- Display results. Provide feedback. Let employees know that you're taking this seriously 
and that they're being watched. Give everyone free rein to compete with other 
departments and/or coworkers. 

- Analyse and reflect. Divide every workday into time blocks and record what was done in 
each. Compare what was accomplished to what was expected. Do the two compare? If 
not, why not? 

- Avoid procrastination. If a task seems too daunting or elusive stop thinking about it and 
move on to the next item on the 'to do' list. This can help maintain momentum. 

Waste Minimisation: Implementation Essentials 

1. Assign responsibility (keep that in mind "that everyone is responsible" is often interpreted 
as no one is responsible). 

2. Display appropriate measurements for all to see. 

3. Educate and involve all employees and departments. 

4. Gather ideas and put them into action. 

5. Make improvements, tabulate and display the results, keep going. 



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PLACE 



Whether in an office, a factory, a store, or a home, most work is 



conducted m buildings - and trie vast majority ot trie worlds 
buildings are problematic. In the United States alone, buildings 
consume more than 68% of all electricity produced. Buildings also 
account for over 39% of America's energy demands and are 
responsible for contributing 38% to the country's total carbon 
dioxide emissions. Equally as unsettling, it's not uncommon for 
indoor pollution levels to be two to five times higher (occasionally 
100 times higher) than outdoor levels due to dust and fumes from 
interior building materials, cleaning solutions, production 
processes, central heating and cooling systems, radon gas, 
pesticides, paint, glue, carpets, and so on. In addition, building- 
related productivity losses and illnesses resulting from toxins are 



these obstacles is therefore fundamental to the sustainability 
process. (Source: U.S. Environmental Protection Agency) 



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15. Building Better Buildings 



The Rocky Mountain Institute (RMI) is an entrepreneurial, non-profit, environmental think 
tank located in Old Snowmass, Colorado. Within its 372 sq. meter headquarters is a fishpond 
where turtles, frogs, carp and catfish swim year round. Bougainvillea blossom under insulated 
skylights that cast a warm glow upon a profusion of grapevines and mango trees. Papayas, 
passion fruit, and bananas are also harvested inside the RMI building despite the fact that the 
entire structure is situated at an elevation of 2,164 meters, the outdoor growing season 
amounts to 52 days a year, midwinter cloudy spells last as long as a month and a half, and 
temperatures occasionally drop to minus - 44 Celsius. Yet the RMI has no central heating 
system and its monthly energy bill amounts to around five dollars. Layers of super efficient 
insulation, heat-recovering ventilators and insulated windows help keep the building and its 
occupants warm all winter long. Most astonishing, however, is the fact that this building 
actually cost less to construct than a conventional structure its size and that the efficiencies 
which make it so cost-effective came from 1983 technologies that paid for themselves within 
ten months. 1 

Further north, in Minnesota, stands the Phillips Eco-Enterprise Center (PEEC), a $5.3 
million commercial and industrial facility. Currently, PEEC, which is a pilot project for the 
Green Building Council, is home to 20 manufacturing companies and office tenants. Features 
built into the 5,946 sq. meter building include salvaged and recycled construction materials, 
wind and solar power sourcing, geo-exchange heating and cooling (heat pumps), active 
daylighting, a green roof, non-toxic low-emission wall coatings, and exterior stormwater 
retention and treatment systems. Because of these efficiencies PEEC has won two design 
awards - including one from the American Institute of Architects. Interestingly, however, that's 
not why the building is in such high demand on the rental market. What draws clients to PEEC 
is the fact that it's less expensive to operate a business under its roof. According to the Building 
Owners and Managers Association (BOMA), normal utility costs for a 5,946 sq. meter building 
add up to around 20% of its annual operating budget. PEEC's annual utility bills amount to only 
$25,000 or about 5% of its annual operating budget. Furthermore, PEEC spends only 17% of 
its operating budget on repairs, security, and ground maintenance, compared with the 23% that 
BOMA says is typical. 2 

Additional Examples of Efficient Buildings 

Commercial buildings that pay for their costs and, in some cases, produce more energy then 
they use, are not a fantasy. Low cost technologies combined with common sense have been 
producing efficient structures for years. For example, Verifone (a division of Hewlett-Packard) 
renovated its California headquarters and subsequently saw its energy consumption drop by 
59%. Soon thereafter, employee absenteeism decreased by 47% and employee productivity 
increased by 5%. The California State Automobile Association office in Antioch, (the cheapest 
CSAA building ever built), decided to flood its 1,459 sq. meter interior with lighting from 
energy-efficient light bulbs and (free) daylight that streams in through super-insulated windows. 
The resulting 63% reduction in energy bills covered the cost of improvements in six months. 
One of the most written about case studies in commercial building efficiency, however, concerns 
the ING Bank in Amsterdam (The Netherlands), which was built in 1987. The ING Bank 
building requires 92% less energy to operate compared with standard structures its size. 



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Moreover, the $3 million in annual reduced energy costs paid for the building's efficiency 
upgrade in three months. Today, the building is so aesthetically pleasant to work in that 
absenteeism is down 15%, productivity is up and employees sometimes do not want to leave in 
the evening. 1 

Overcoming Wasteful Building Practices 

Slowly, architects and builders are waking up to the fact that buildings - where most people 
spend over 90% of their time - do not need to be a major cause of waste or inefficiency. 
The main reasons why most of the world's buildings either remain inefficient or are built 
inefficiently include: 

- compensation paid to architects and engineers is usually based either directly or indirectly 
on a percentage of the cost of the building or the equipment specified for it (i.e.: fees are 
based on how much the building costs rather than how much it saves), and, 

- most property developers do not expect to pay the energy bills of the structures they build 
so they have little or no interest in energy-saving or waste reduction solutions. 

Fortunately, progress is being made remunerating contractors for long-term savings rather 
than how much money can be saved in building expenses in the short-term. This is good news 
when one takes into account that efficient buildings typically sell or lease faster and retain 
tenants better than their inefficient counterparts. In addition, green buildings have greater 
visual, thermal and acoustic comforts that yield valuable financial gains in terms of productivity, 
retail sales and manufacturing output. In a 2004 survey of 719 building owners, developers, 
architects, engineers and consultants, 91% believed that green buildings improve the health and 
well-being of their occupants. 3 

Efficient Buildings Increase Profits 

Financial savings in terms of lower energy needs are not the only benefit provided by energy 
efficient buildings. Following is a list of documented improvements obtained after natural light 
(derived from windows or tubular skylight systems) was introduced into workplaces: 

- Dramatic staff- turnover reductions. 

- A doubling of customer numbers. 

- Customers shop for longer periods of time. 

- An increase of up to 40% in retail sales. 

- Productivity increases of up to 18%. 

- A drop in accident rates by as much as 50%. 

- Improvements in task performance times. 

- Employees able to identify items (including defects) better and faster. 

- An increase in patient recovery rates and reduced hospital staff stress. 

- Improvements in the vision abilities of the elderly. 

- Students enjoy increased health benefits and, strangely enough, fewer dental cavities. 4 

These types of improvements have not just been recorded in the United States. The Canada 
Green Business Council drew similar conclusions when it discovered that the introduction of 

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natural daylight raised productivity 13% in Canadian businesses, increased retail sales by up to 
40% and helped improve school test scores by as much as 5%. Improved ventilation added to 
these enhancements by increasing productivity an additional 17% and decreasing sickness by up 
to 50%. 5 

Getting Over the Hurdles 

Without question, the greatest misconception about energy-efficient buildings is that they 
always cost more - which many architects insist is not true. Any building can be made either 
more expensive or less expensive depending on how it is designed and constructed. Yes, adding 
more insulation, installing rainwater collectors, fitting higher quality windows, placing solar 
panels on roofs, and putting passive shading structures over windows can incur extra expenses, 
but when these improvements eliminate the need for a heating and cooling system the extra 
costs are often negated. 

High-rise tower buildings can also enjoy the benefits of efficient construction even though, 
on average, they require 30% more energy and materials to build and operate. Just as with 
small buildings, most extra costs can be neutralised through efficient design and materials. For 
example, the Rocky Mountain Institute has shown how a six-story building can fit into a 
five-story structure (five-stories is usually the limit for building code heights in many towns and 
small cities) by making a few structural changes and virtually eliminating ducts and suspended 
ceilings. Under-floor ventilation and wiring and super efficient windows and day-lighting are 
also incorporated. Construction expenses remain virtually unchanged (mostly because of a 
reduction in heating, ventilation and air-conditioning needs) with subsequent energy costs 
reduced by one-half to three-fourths. Natural light and ventilation, the building's low energy 
and maintenance costs, a propensity to produce more income, and natural good looks and 
interior comfort means that everybody wins: the owners of the building, the occupants of the 
building, and the neighbourhood where the structure is located. 

Fix an Existing Building First 

Efficient buildings do not have to be built from scratch. A business looking to build a new 
factory, office building, or retail operation, should first consider upgrading an existing building 
before constructing a new one. It's relatively easy (and often more cost-effective) to re-fit an old 
building - even historical buildings - than to build new. For example, the American National 
Audubon Society upgraded a 100 year old 9,104 sq. meter building in 1992 at a cost roughly 
27% below that of building from scratch (all costs were recouped within five years). The 
resulting retrofit cut two-thirds off the building's energy requirements, improved ventilation, 
eliminated indoor toxins, and introduced an office recycling programme that reduced waste 
by 70%. 

Maximising Building Interiors 

One of the more intriguing aspects of waste is that the costs it creates don't just add up, they 
tend to multiply. Take, for example, a parametric analysis of an office building in Florida, which 
revealed that: 

- 30% of the building's annual cooling load was used to fight the heat produced by its 
lighting system, 

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- 20% was used to combat solar heat that streamed in from the windows, 

- 15% was used to offset heat build-up from the roof, and, 

- 13% was used to neutralise the heat generated by internal office equipment (i.e.: 
photocopiers, computers, printers, coffee makers, etc). 8 

What this study reveals is that 78% of the building's cooling needs were needed to offset 
wasteful inefficiencies (ie one poorly designed system was fighting against that of another and 
the bill-payer was funding both sides). For either a small or big business, these costs create 
significant money loss. To be sure, firms that lease or rent their premises or share building space 
with other companies may not be able to perform major work that optimises the workplace. 
That being said, it may be feasible to negotiate new lease terms if whatever improvements can 
be made are seen to reduce operating costs. 

Suggestions for Improving the Efficiency of Building Interiors 

How can a business reduce the unseen, unfelt and silent pileup of compounding inefficiencies 
in the building it occupies? An effective first step is to turn off all office equipment and 
machinery at its source when the items are not in use, which can cut 5% to 40% off energy bills. 
Even the battery charger for a mobile phone draws electricity when the phone is not hooked up 
to it. Additional suggestions include: 

- Replace all light bulbs with energy efficient light bulbs. Energy efficient light bulbs save 
money by: using less electricity, emitting less heat (which reduces a building's cooling 
needs), and lasting longer than standard bulbs (a recent study showed that 70% of 
energy-efficient bulbs last significantly longer than their manufacturers claim). 

- Install intelligent lighting systems. Instead of lighting up entire rooms or work areas, use 
'task lighting' that produces light only where it is needed. 

- Replace old exit signs with Energy Star rated alternatives. For every sign changed, $10 can 
be eliminated from the energy bills and the bulb will last ten times longer than a 
standard bulb. 

- Put lighting systems on a timer and hook up exterior lights - as well as bathroom, closet, 
and storage area lighting - to motion detectors. The city of Eindhoven, in the Netherlands, 
for example, is considering attaching motion detectors to its outside lighting - including 
its billboards - which is predicted to reduce the city's energy bills by 30%. 

- Insulate interior walls, ceilings and wall spaces. Extra insulation is usually worth the cost. 

- Replace all office equipment with energy efficient alternatives. Doing so not only reduces 
energy costs, it also reduces the heat these devices emit. Electrical equipment always 
carries two price tags: the purchase price and operating cost. Look for accredited energy- 
saving labels to ensure that the electricity requirements of the equipment you need will be 
reduced by as much as 30% (or more). The A-OK Auto Body Shop in Philadelphia, 
Pennsylvania, for example, replaced its interior lighting system with efficient substitutes, 
installed motion detectors on exterior and bathroom lighting, placed timers on water 
heaters and coffee pots, and added programmemable thermostats to its climate control 
system. As a result, its energy bills declined $5,577 in one year. 9 

- Remove paper towel dispensers from restrooms and replace them with low-energy blow 
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dryers. Making one ton of paper towels from recycled paper requires 26,498 liters of 
water, 1,363 liters of oil, and 158 million BTUs of energy. During this process 39 kilos of 
pollutants are released into the atmosphere. Noting this waste, the university student 
union at California State Northridge removed its paper towel dispensers and replaced 
them with wall mounted, low-energy hand dryers that eliminated $21,000 worth of 
annual paper towel costs. 

- Seal all leaks in ducts and ventilation systems as well as around plumbing and wiring. 
Duct system leakage can account for up to 30% or more of wasted energy. Proper duct 
sealing also keeps dust, mould and mildew at bay. 

- Take advantage of under-floor heating. Heat rises so an under-floor heating system is 
usually more efficient than one that uses wall-mounted radiators or ceiling vents. 

- Take extra care to select non-toxic carpets (and carpet glue), paint, varnish and other safe 
interior decorations. Fumes and particles from these materials debilitate human health 
and performance. 

- Consider purchasing an evaporative cooler (or 'swamp cooler') for cooling needs. 
Evaporative coolers pull air over pads soaked in water, which uses a quarter of the energy 
of refrigerated air. 

- Install low-energy ceiling fans. By gradually circulating air through a building, slow-speed 
ceiling fans make the most of a heating and cooling system and can drastically reduce 
energy costs. A Subway Sandwiches shop in Norman, Oklahoma, for example, cut its 
annual energy costs by $20,000, in part, by installing ceiling fans in its kitchen. The shop 
also replaced its lighting with energy-efficient bulbs (reducing the number of bulbs, yet 
doubling the store's brightness), replaced old ice makers and water heaters with efficient 
models, and tinted the building's windows. 9 

- Use a programmemable thermostat. For every degree a thermostat is lowered, up to 5% 
can be saved on the heating portion of an energy bill. Another good tip is to keep 
electrical equipment and lamps away from thermostats where they can adversely affect 
temperature readings. 

- Wrap hot water heaters in an insulated blanket. This not only saves money the electricity 
it saves can prevent hundreds of pounds of carbon emissions from entering 

the atmosphere. 

- Where possible, fill workplaces with indoor plants and trees. Indoor gardens have a 
remarkable effect in reducing employee fatigue and can be instrumental in 
increasing productivity. 

- Consolidate offices and work areas located in several buildings into one. This practice, 
along with sealing off and shutting down unused work areas, can save huge amounts 
of money. 

- Check to see if your business is eligible for energy efficient tax incentives. Some 
governments offer tax breaks or tax credits for businesses that strive to increase the 
efficiency of the building in which they operate. Typically, tax credits are awarded for 
installing energy-saving technology and equipment, using hybrid vehicles, adopting 

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efficient heating and cooling systems, switching to solar (or wind) energy systems - and/ 
or for making efficient constructions or renovations. 

- Keep in mind that these suggestions are just a fraction of the energy-saving practices 
available to building operators and owners. Involve your employees in finding more. 

For more information on how the overall energy efficiency of a workplace can be improved 
along with a reduction in energy bills, visit the Energy Star website (www.energystar.gov) - a 
no-cost programme run by the U.S. Environmental Protection Agency. In Europe, visit Energy 
Star at: www.eu-energystar.org. Alternatively, in the UK, seek out the Energy Saving 
Recommended (ESR) logo when buying electronics. The ESR endorses products considered to 
be the most energy efficient available (the ESR programme is managed by the Energy Saving 
Trust: www.energysavingtrust.org.uk). A third European label is the TCO Certification 
(Tjanstemannens Centralorganisation) established by TCO Development (www. 
tcodevelopment.com) and run by the Swedish Confederation of Professional Employees. 

When Building New, Think before Doing 

If upgrading an existing building to maximise sustainable practices is not an option and the 
decision to construct a new structure has been made, planning should begin well in advance. 
Most buildings can cut 20% to 50% (or more) off their annual heating and cooling costs - with 
no additional expense - by maximising location, positioning, and shape before construction 
starts. This includes placing the building close to major transportation routes, locating next to 
hills or trees for protection from wind and sun, aligning the building with the sun's trajectory to 
maximise or minimise solar heat gain, and using the structural mass and shape of the building 
to the utmost benefit. Additional examples include: 

- Cover parking areas with light-coloured cement or other light-coloured surfacing rather 
than asphalt. This can reduce exterior air temperatures around a building by as much as 
five-degrees. 

- Install a porous parking lot. Chunky, light-coloured gravel that has had its finer particles 
removed allows rain and snow to be absorbed into the ground. This simple idea was once 
presented to administrators at the Ford Motor Company and they refused to consider it. 
Eventually, however, they were persuaded to gravel a small test zone. Soon managers and 
employees from all over the Ford complex were going out of their way to park their cars on 
the test area because it contained no standing water or ice (or road salt), which kept the 
cars cleaner. 6 

- Carefully choose the colour and texture of the building's exterior. Dark colours absorb 
sunlight (and heat) as do textured surfaces. To prevent solar heat build-up, paint buildings 
a light colour and make sure the finish is shiny and smooth. 

- Utilise natural storm water treatment. Channeling rainwater runoff from a building into 
tanks (for later use) or swales lined with indigenous vegetation is not only eco-friendly it's 
also cost-effective when compared to an expensive network of underground pipes and 
treatment plants. 

- Avoid unshaded rock, cement, or asphalt landscaping on the south or west sides of a 
building, which increase ambient temperatures and radiate heat long after the sun has set. 

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- Surround buildings with as much indigenous vegetation as possible. Not only does this 
decrease surrounding air temperatures and reduce landscaping water needs, it also reduces 
labour costs, fertiliser expenses and landscaping waste (non-native plant species are often 
more labour, water, and cost intensive). Trees are not only valuable 'carbon sucking tools', 
they're an excellent source of shade and a great way to increase property values. 

- Ivy or grapevines grown in window boxes or on trellises can shade and beautify entire 
sides of a building (this is called a 'green wall'). 

Building Efficiently 

If the following suggestions were used to build the over 170,000 commercial buildings 
constructed across the USA every year, it has been estimated that these structures would not 
only pay for themselves very quickly (and be cheaper to operate), they would substantially 
reduce the country's dependence on foreign oil and drastically reduce its carbon emissions: 

- Reuse, reclaim and recycle from demolition sites. Nearly 44,000 commercial buildings in 
the USA are demolished every year - and the construction, renovation and demolition 
debris from these work sites accounts for nearly 60% of the country's total non-industrial 
waste. Recoverable materials include concrete, asphalt, metal (including wiring), bricks, 
plumbing material and wood. 

- Use local materials. The further afield materials are sourced, the more energy, labour and 
money it may take to harvest, package, and transport them. 

- Reduce the use of concrete. Cement production accounts for almost 10% of global carbon 
emissions. If concrete must be used, consider a mixture of 55% concrete and 45% slag (a 
waste product from blast furnaces) which saves energy and produces an alternative that is 
stronger than concrete alone. When bricklaying, use reclaimed bricks with a carbon- 
neutral lime mortar. 

- Use sustainable engineered wood products in place of standard wood products. Also 
called composite wood, engineered wood is manufactured by binding fibres from young 
trees, sawmill scraps and wood particles. Engineered woods produce more open living and 
working space by reducing the amount of wood needed for load-bearing interior walls. 

- Ensure that all wood products are approved by the Forest Stewardship Council or a similar 
recognised environmental organisation to ensure that they come from a 

sustainable source. 

- When wiring a building, use the next higher size diameter of electrical wire than that 
recommended by building code requirements. Thicker copper wire costs more, but 
because it reduces electrical resistance it costs less to operate. In a typical office lighting 
circuit, using a larger wire size yields about a 193%-per-year (after tax) return on 
investment. 7 A student of mine in France lowered his monthly electricity bill more than 
two- thirds by re-wiring his house with fatter wire and replacing all the light bulbs with 
energy efficient bulbs. 



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- Use water-based paints and wood treatments that are less toxic and emit fewer 
harmful fumes. 

- Insulate, insulate, insulate. By insulating a building both inside and outside, it is possible 
to dramatically reduce or eliminate a heating and cooling system. For example, around 
10,000 structures (called passive houses) without furnaces or air conditioners have been 
built in Germany, Sweden and Switzerland. Within these structures, everyday appliances 
(such as a television or hot water heater) emit enough heat to keep the occupants warm 
and snug in winter. 

- Use energy efficient windows. Energy efficient windows are fundamental to the overall 
reduction of a building's energy requirements. It has been estimated that a routine 
renovation of all big office towers in the USA with insulated windows would probably save 
the country $45 billion in energy costs. Standard glass windows have an efficiency 
R-value of 1, which means that more heat is lost through a window than an entire exterior 
wall (a reasonable R-value of an efficient wall is around 25 or 30). Super-insulated 
windows have an R-value of up to nine (or more) and can be 'programmemed' to reflect 
unwanted heat and/or ultraviolet light while letting in more ambient light. An 18,581 sq. 
meter office building in Chicago replaced its 20-year-old windows with energy efficient 
'superwindows' that let in more daylight, reduced the amount of heat that was let in, and 
lowered the cooling load of the building by 85%. This meant that the old climate control 
system could be replaced with a model that was three-fourths smaller and a quarter of a 
million dollars cheaper. Furthermore, the new air-conditioning system requires 75% less 
energy to operate - thereby saving hundreds of thousands of dollars each year in 

energy costs. 

- Ensure the heating and cooling system is both efficient and not too big for the building. 
Far too many buildings are constructed with HVAC systems that are more powerful than 
what is actually needed. In addition, many HVAC systems leak up to 30% of their heating 
and cooling. 

- Solar shading is essential for all glass exteriors that face the sun. Although super efficient 
windows and skylights do a good job of letting in light while keeping out heat, 'light 
shelves' (a type of indoor awning) offer additional protection from solar heat and are 
much cheaper than buying and running an air-conditioning system to offset solar heat. 
Adjustable window glazing allows a building to either deflect unwanted light and heat or 
capture it like a greenhouse during cooler months. 

- Look into drilling geothermal wells that use ground temperature to both heat and cool. 
Just a few meters down from sea level, the Earth's crust remains relatively constant at 14 
degrees Celsius. Low-cost interior environmental control systems can use this consistency 
to either warm or cool a building. 

- Consider installing a green roof on your building. Roofs are huge accumulators of heat 
that usually require massive amounts of air conditioning to offset. A green roof is an 
inexpensive and lightweight roofing system planted with heat-loving foliage. The benefits 
of a green roof include a reduction in ultraviolet radiation (which helps prolong the life of 
the roof), increased energy efficiency for the building (green roofs provide excellent 

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insulation properties), a decrease in rainwater runoff, and excellent noise reduction 
properties. Wider, regional benefits include increased air quality, lower electricity 
demands (particularly in the summer), reductions in local air temperatures, and an 
improvement in the aesthetics of the area where the building is located. When used in 
conjunction with a system that collects and stores excess rainwater, green roofs can also 
reduce maintenance costs associated with standard roofs. 

- If installing a green roof is not possible, cover your roof with reflective material or 
solar panels. 

- Incorporate good cross ventilation in the building. Take advantage of side vents, wind 
scoops, skycourts, balconies, atriums and low-power ceiling fans. Good air movement 
promotes temperature balance (which reduces the need for heating and cooling) and 
provides greater comfort. Tower buildings should allow occupants to open their windows, 
if just a few inches, to promote ventilation. 

- Avoid the use of PVC and other energy-intensive, non-ecological construction materials. 
Replace them with sustainable alternatives. For example, sewer pipes can be made of clay 
rather than plastic. 

Building a Better Future 

As one developer put it, once you learn a better way to build you do not go back. For more 
information about the planning and construction of efficient, energy-saving buildings, visit the 
Advanced Buildings website at www.advancedbuildings.org. Another option is to contact 
the U.S. Green Building Council (USGBC). The USGBC (www.usgbc.org) is a network of 
10,000 construction leaders from every sector of the building industry who have made it their 
mission to transform the building industry. The USGBC has developed a rating and certification 
system titled Leadership in Energy and Environmental Design (LEED) to recognise the 
efficiency performance of buildings (as well as healthcare systems and labs) in five key areas: 
sustainable site development, water savings, energy efficiency, materials selection and indoor 
environmental quality. The purpose is 'to transform the way buildings and communities are 
designed, built and operated, enabling an environmentally and socially responsible, healthy, and 
prosperous environment to improve the quality of life.' 

The average LEED certified building uses 32% less electricity, consumes 30% to 50% less 
energy, draws 40% less potable water, enjoys a 70% savings on waste output, and saves 350 
metric tons of carbon emissions every year. 



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The amount of water in the world is finite, yet between 1900 and 1995 global water 
consumption rose six-fold - more than double the rate of population growth. 1 Interestingly, 
although our planet is mostly covered by water, more than 97% of it contains salt, making it 
unsuitable for drinking or irrigation (desalinating salt water produces one- third potable water 
and two- thirds poisonous, intensely salted waste that cannot be reintroduced into the 
environment without repercussions). The less than 3% of what remains is either frozen at the 
poles, crystallised in glaciers, or is locked in underground aquifers and is too deep to retrieve. 
Less than half of one percent can be used by humans, but this amount increasingly poses a 
potential hazard because it is rapidly becoming more polluted. Currently, around 50% of the 
world's diseases are caused by contaminated water, and water rights have been - and continue 
to be - a worldwide source of conflict because water shortages often translate into food 
shortages and manufacturing difficulties. The bottom line is that minimising water 
consumption in business not only lowers operating costs, reduces water disposal expenses, and 
promotes regional stability, it is also the right thing to do. 

How Businesses Waste Water 

According to local and national Australian government offices, most businesses waste water 
in the same ways they waste energy and other materials. Among these practices are: 

- installing wasteful production systems that require more input than is needed, 

- acting as if supplies are ubiquitous and renewable and don't need to be managed, 

- using pristine supplies for purposes that don't require pristine inputs, 

- not thinking in the long-term, and, 

- in general, not making better use of what little is available. 

How a Business can Save Water 

Saving water is always worth the effort. For example, the Frito Lay factory in Casa Grande, 
Arizona is working to recycle 85%-90% of the water used in its plant combined with an intense 
energy efficiency programme. Faced with regional droughts and potential water use 
restrictions, the company decided to act fast and expects to save $60 million annually 2 'When 
water becomes scarce our ability to produce products comes into play,' says Al Halvoreson, Frito 
Lay's director of environmental sustainability 'We want to have technology developed and 
scaled so we don't need to move production to follow the water.' Suggestions used by Frito Lay 
and other companies to conserve water include (see also page 127): 

- Educate employees and involve them in all water conservation practices. It's everyone's 
job to save water so make it everyone's job to save water. Kraft Foods set an objective of 
reducing its water consumption by 15% before 2011 and surpassed that goal by obtaining 
a 21% reduction. 'We're changing behaviour and getting results,' says Steve Yucknut, vice 
president of sustainability. 

- Designate a water efficiency coordinator, support him or her and, as with other 
sustainable practices, constantly remind employees what your company is trying 
to achieve. 



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Locate the sources where water is used at your place of work (washrooms, sinks, climate 
control systems, hoses, etc. . .) and discuss and identify ways that water can be saved 
at each. 

Get employees in the habit of reporting all leaks and water losses immediately. Train 
security guards and cleaning crew to identify, handle or report water wastage when they 
are making their rounds. 

Install motion detectors under taps, which operate when a hand is placed beneath them 
and immediately turn off afterwards. Alternatively, install taps that automatically shut off 
after running a few seconds. 

Install water flow fixtures (aerators) on all faucets, toilets, urinals and showerheads. This 
alone can reduce water requirements by 60% or more. Screw-on water flow reducers (also 
called aerators) cost just one or two Euros and can cut the amount of water that flows 
from a faucet by one-half or more. The remaining water is mixed with air and the result 
feels as though the tap is full on. Additional water saving devices can be installed in toilets 
(which are widely considered to be the greatest wasters of water in any building) and 
urinals. Toilet technology has advanced to such a degree that some toilets require no 
water for flushing. A university in California, for example, replaced its 13 male restrooms 
with waterless urinals and saved $15,000 on its annual water bill. Further east, an office 
building in Denver, Colorado switched its toilets, urinals, faucets, and showers with 
water-saving replacements and saw its water bills plunge 80%. 3 

Fix all leaks and repair or replace inefficient control valves, pumps and pipes. 10% to 20% 
of a business's water loss usually comes from ignored leaks - which is tantamount to 
pouring money down the drain. A single tap left trickling in a washroom, for example, can 
cost up to $80 in water charges per year. A leaking toilet (particularly one with its valve 
stuck open) can cost up to $90,000 per year. 4 

Install a closed-loop water system to reclaim and reuse industrial wastewater. High 
efficiency reverse osmosis (HERO) systems, for example, reclaim wastewater. Similar 
techniques to filter and re-use water from industrial processes or air conditioning cooling 
towers can cut water bills by 90%. 

Recycle 'grey water' and rainwater. Most industrial systems use tap water (drinking water) 
for most, if not all, of their production needs. The irony is that recycled water from sinks, 
showers, production processes, washing machines, and drinking fountains (also known as 
'grey water') can often be used in place of tap water. Even rainwater is of sufficient purity 
for most industrial processes and has the added benefit of being free. Harvested rainwater 
(from collection tanks on rooftops or building sides) can be used for irrigation, 
landscaping, toilet flushing, and other purposes. 

Use pressurised air to perform functions previously done with water. Pressurised air can 
be used to clean equipment, products and packaging (for example bottles and cans). 

Do not use toilets as a garbage disposal. 

Shut off all cooling units when they are not needed. 

Optimise the blowdown or bleed-off controls on boilers and cooling towers. 



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- Minimise water used in cooling equipment in accordance with the 
manufacturer's directions. 

- Turn hoses off at the faucet rather than the nozzle. 

- Use drip irrigation methods for landscaping needs. Drip irrigation involves laying a 
perforated water hose a few centimetres below the ground. When turned on, the holes 
emit water - one drop at a time - which is sufficient to keep plants hydrated. This system 
was used at a business I ran in the Middle East. We were located in the middle of a 
scorching desert, yet the grounds were surrounded year in and year out with flowers, fruit 
trees and shrubbery. Potable bottled water cost twice as much as petrol, so we used gray 
water (from a sewage treatment plant) in our drip irrigation system. 

- Never place watering or irrigation systems on a timer. If you recall the last time you 
passed through a neighbourhood in the rain and saw the water sprinklers on you will 
understand why. 

Efficient Wastewater Treatment 

All work places produce sewage, which is an expense. There is, however, a way to eliminate 
sewage costs: treat the sewage where it is produced instead of paying to have it transported and 
treated elsewhere. Ecological engineering (also known as ecological sanitation or living 
machines) is an emerging industry that treats raw sewage, including effluent, heavy metals, and 
other chemicals, economically and safely by pumping them through a series of open tanks filled 
with organic plant and animal life. Based on the science of estuaries - nature's own filtration 
system - each tank, which averages about four meters in depth, contains a unique ecosystem 
designed to breakdown select toxins before passing them on to others further down the line. 
The result is odour free and can resemble a pristine garden complete with waterfalls, lily pads 
and fishponds. Indeed, one ecological engineering company (Living Technologies in Burlington, 
Vermont) held a wine and cheese party at one of its 'living machine' locations and had to keep 
reminding the guests to keep their hands out of the water. 5 

Typically, it takes one to three days for sewage to pass through all the required tanks in a 
living machine system. The first tank is covered with a layer of soil and living grass. Odours and 
gases filter through the layer and are broken down into carbon dioxide and oxygen. Bacteria and 
plants work their magic in the remaining tanks. The only waste created is that from the plants, 
which feed off the system and have to be pruned regularly. In regions that experience harsh 
winters, tank systems can be positioned in a passive greenhouse-type structure or they can be 
built into, and compliment, the building they service. Conversely, a system can be arranged 
outside. Every system can be uniquely tailored to suit the volume and makeup of its waste. The 
end result is water of such high purity that it only requires a small amount of additional 
treatment to make it drinkable. Some companies even harvest and sell the methane gas their 
living-systems produce, as well as the flowers, fish, tomatoes, and lettuce that grow within them 
- which means that 'living machine' systems can be money-spinners. 

Like many efficient processes, the cost of a living machine not only pays for itself, it is also a 
huge source of pride and admiration for employees. For example, M&M Mars in Brazil and 
Australia, the Vermont Welcome Center on U.S. Interstate 91, the Sonora Mountain Brewery in 
California, the Body Shop factory in Ontario, Canada, and the National Audubon Society in 

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Florida have all boasted at one time or another about the beauty and efficiency of their 
wastewater treatment 'living-machines'. 

For More Information on How to Save Water... 

Many regional and national governments (particularly those in dry parts of the world) are 
keen to help fund water saving and water treatment business projects. Contact them. 
Additional organisations that can help minimise water use (many of which come from regions 
where droughts force inhabitants to treat water respectfully) can be found at: www. 
bewaterwise.com; www.epa.gov/watersense; www.savewater.com.au; www. 
savingwater.org; www.sydneywater.com.au; and www.waterwise.org.uk 



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17. The Macro Advantages of Micro Power 

Although oil has traded at $147 a barrel, and may climb to $200 relatively soon, many 
experts insist that the worst is yet to come. Here are the numbers. Last year, the world 
consumed 86 million barrels of oil a day (up from 78 million barrels in 2002) and every year 
consumption increases. Between 1995 and 2004, for example, demand grew by 3.9 million 
barrels per year in the USA alone (currently, America consumes 25% of the world's oil 
production). China and India still have not caught up with that amount (China's demand grew 
by 2.8 million barrels annually during the same period), but there is no doubt that these two 
countries are securing additional amounts every year and need more to continue their growth. 
The problem, as Jeroen van der Veer, CEO of Royal Dutch Shell, stated in a recent e-mail to his 
staff, is that '... after (the year) 2015, supplies of easy-to-access oil and gas will no longer keep up 
with demand.' 

John Hess, Chairman of the Hess Corporation agrees. An oil cris is coming in the next 10 
years,' he says, 'it's not a matter of supply. It is not a matter of demand. It's both.' James Mulva, 
CEO of ConocoPhillips, is also worried. In November of 2007, he told a Wall Street conference, 
'I don't think we're going to see the supply (of oil) going over 100 million barrels a day... Where 
is it going to come from?' Earlier, in October of 2007, Cristophe de Margerie, CEO of French oil 
company Total S. A., relayed that the production of even 100 million barrels of oil a day by the 
year 2030 'will be difficult'. 1 

When the CEOs of the world's oil companies start issuing warnings - and with climate 
change resulting from the burning of fossil fuels posing an ever-increasing threat - there is no 
better time than now for astute businesses to consider alternative sources of energy. Micro- 
power involves equipping a building or group of buildings with an independent power source 
that either wholly or partially supplies needed energy. For example, the Mauna Lani Bay Hotel 
on the Kona-Kohala coast of Hawaii turned its premises into a 100-kilowatt power station by 
retiling its roof with solar cells. In Aberdeen, Scotland, the Cults Primary School set up a 
five-kilowatt wind turbine in May of 2007 that not only reduced its electricity bill, but also cut 
its annual carbon emissions by 5,633 kilos. And across the American state of Iowa, wind 
turbines now power ten schools either partially or completely. The 4,924 sq. meter elementary 
school in Spirit Lake, Iowa, for example, installed a 250-kilowatt wind turbine that provides an 
average of 350,000-kilowatt hours of electricity per year. Excess electricity, which can be fed 
into the local utility system, earned the school $25,000 in its first five years of operation. 2 

Wind Power 

Many energy analysts claim that if they could do just one thing to alleviate the world's energy 
problems they would allow every form of energy to compete fairly without the intervention of 
governments and corporations. For example, Dr David Toke of Birmingham University (UK) 
estimated that onshore wind power is now producing electricity at the equivalent oil price of 
$50-60 a barrel - and offshore wind power is pumping out energy at the equivalent of $70-80 
per barrel. Keep in mind that Toke's estimates assume a guaranteed income flow of 15 to 20 
years and do not take into account any government subsidies associated with coal and oil. 3 

Whether for sailing or rolling a grindstone in a flourmill, wind power has been around for 
centuries. Today, Denmark derives over 20% of its electricity needs from wind turbines; 
Germany gets about 10% of its electricity from the wind; and every year Spain installs over 

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2,000 megawatts of wind turbine generators. At the end of 2009, the installed capacity of wind 
power in the United States was just over 35,000 megawatts (enough to power over 10 million 
homes) and every year the number grow (as do the total number of jobs that wind 
turbines create). 

Wind turbines come in a variety of shapes and sizes and usually last around 20 years or 
longer if they are maintained correctly. The traditional variety looks like a windmill, but other 
designs resemble the whisks of a giant eggbeater. Size-wise, wind turbines range from huge 
three megawatt, 11-story towers (that can power up to 1,000 homes), to relatively modest 
one-megawatt turbines that can power 350 homes, or much smaller one to ten-kilowatt 
roof-mounted turbines that can be purchased from specialised retailers and meet the needs of a 
single household or business. 

Is Wind Power Right for Your Business? 

The single most important factor in deciding whether or not a wind turbine will provide an 
adequate energy source for a business is to measure the force and duration of wind that is 
available. Some turbines are designed to operate at low wind speeds while others can withstand 
powerful gusts. A good site must have a minimum annual average wind speed of around 18 to 
21 kilometres per hour. To determine the average wind speed in your area, contact a local 
airport or meteorological station. Installing a wind turbine also involves learning about a 
variety of factors including costs versus productivity, ice throw, net metering, rotor radius (the 
length and size of a turbine's blades is directly proportionate to the amount of energy it can 
produce) as well as the programmes, laws, and incentives of local, state, and federal authorities. 
For example, some coal-producing regions actively discourage the use of sustainable energy by 
insisting that electricity production must come from coal-fired utility plants. Additional 
considerations that should be researched before buying into wind power include: 

1. Determine whether or not a favourable agreement can be reached with the local utility 
company. Some electricity producers and governments will not tolerate competition and 
may refuse to buy the additional electricity a sustainable power supply produces or may 
force the micro-power to be fed directly into the nation's grid rather than the business. 

2. Project feasibility concerns. Will the noise, movement and aesthetics of the proposed 
wind turbine be an issue for the local community? Is the site's geology suitable? Will the 
turbulence (which is created by every wind turbine) effect nearby structures? Can zoning 
permits be obtained? These questions will need answers. 

3. Availability and maintenance concerns. The availability of wind turbine parts, the 
reliability of the manufacturer, and the services of a professional who is familiar with their 
operation and maintenance is exceptionally valuable. Will a qualified professional be 
available to maintain and repair your wind turbine when it needs servicing? 

Most users of wind power seem to agree that the benefits outweigh the disadvantages. A 
model created by the National Renewable Energy Laboratory (USA), for example, found that 
several locally owned wind turbine projects in Iowa generated significantly higher economic 
impact levels than projects of equal capacity owned by other investors. Additionally, in every 
case, the use of wind power was found to positively influence the entire community, which led 
to increased community pride and cohesiveness. That being said, not all wind turbine stories 

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have happy endings. Years ago in Poland, for example, a village invested in a huge wind turbine 
that produced hundreds of kilowatts of extra power. Unfortunately, the regional power 
company would not buy the additional electricity and residents discovered that the cost of their 
purchase would end up taking years to recoup. If the locals had done their homework, they 
would have discovered that a smaller, less expensive wind turbine would have been more 
suitable. For more information on turbines, visit the American Wind Energy Association 
website at www.awea.org or the European Wind Energy Association at www.ewea.org. 

Solar Power 

Solar power is often considered one of the most expensive sustainable energy options 
available. Generally speaking, it does cost three to four times more to produce power from solar 
cells than it does from conventional sources. The good news, however, is that the cost of solar 
power drops almost every year because prices decrease about 18% every time production 
doubles. Power from the first solar cells, for example, cost about $200 per watt. In 2007, the 
price was $2.70 per watt. Electricity produced from solar power is now so competitive that in 
some cases it is actually cheaper to use solar cells than conventionally produced electricity. 
Isolated street lamps, emergency phones on highways, and electrical systems in remote 
communities are cheaper to operate with solar power when one takes into account the cost of 
installing long distance electrical transmission lines. 

In situations where solar power costs are greater than conventionally produced electricity, 
solar voltaics can still pay for themselves in a relatively short period of time. Take the Times 
Square headquarters of Conde Nast, for example. Situated in a 48-story building in New York 
City, 14 of the building's floors are covered with solar panels that added an additional 5% to 10% 
to the overall construction price tag. The half million dollars in annual energy savings, however, 
paid for their cost within five years. 4 Meanwhile, in Madrid, Spain, telecom company Telefonica 
installed Europe's largest solar power plant on its roof. The 16,000 solar panels generate 
three-megawatts of power, which means that the building is energy self-sufficient and also 
makes money by selling excess power. 

Solar Cell Facts 

- Solar cells do not require direct sunlight to operate. They function quite well under cloudy 
or rainy conditions. For maximum effect, however, they should be placed where direct 
sunlight will hit them. 

- Solar energy offers a one-time capital expense. Virtually no other costs accrue. 

- Solar cells last a long time. Many solar cells produced in the 1970s still function to this 
day. Lab testing has shown that under the right conditions solar cells can last up to 
40-years or more (although the energy output of solar voltaics usually decreases 
overtime). 

- Most solar cells are made from silicon, which is plentiful and does not have to be mined. 

- Some solar cell applications are so thin they can be 'painted' onto foil or other materials, 
solar voltaics can also be sewn into clothing, backpacks, and briefcases to provide power 
for portable electrical devices. 



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- Solar panels can be used on new and old buildings as roofing, or mounted vertically on 
exterior building walls, or used as sunshades or covers over windows, walkways 

and carports. 

- Solar cells reduce a business's impact on the environment, cut its electricity costs and send 
a positive message to the public about the business's commitment to clean and 
sustainable practices. 

- Most solar voltaics have efficiency variables of between 5% and 17%. Specialised solar 
cells produced in the laboratory - as well as those used in space - can reach efficiency levels 
of 25% to 40%. The reason why solar voltaics are so inefficient is because about 30% of 
the energy they collect is converted into heat. Moreover, most solar cells cannot convert a 
broad spectrum of the sun's wavelengths into electricity. Improvements in technology, 
however, are making up for these shortcomings. Since sunlight is plentiful (and free) 
'waste' is not much of a concern. 

Are Solar Voltaics Right For Your Business? 

If your organisation can afford to buy several years of its power in advance while awaiting 
payback then yes, solar power may be for you. Note that energy from the sun can also heat 
water (and buildings) as well as drive steam turbines. For example, calculations for concentrated 
solar power, which uses mirrors to concentrate sunlight onto a fluid-filled container to produce 
steam that drives a turbine, is cost-equivalent to oil priced at $50 per barrel - or as low as $20 
per barrel when the technology is scaled up. 3 For more information about solar power visit: 
www.solarserver.de and click on the English translation icon at the top of the home page. 

Fuel Cells 

Without question, of all the clean-energy producing alternatives currently being talked about, 
fuel cells elicit the most excitement. Fuel cells require no combustion, have no moving parts, are 
silent, and are virtually pollution-free. Most important, since hydrogen is almost always found 
combined with other elements, its supply is cheap and plentiful. Some fuel cells run on the 
hydrogen found in sugar. Others use the hydrogen in the water produced by the cell itself. 
Hydrogen derived from traditional hydrocarbon sources (i.e.: coal, gasoline, methane, methanol, 
natural gas, or propane) can also be used as a fuel, although a small amount of carbon dioxide, 
sulfur, and other bits of matter from these sources is emitted as a result. Just as important, 
fuels cells can be made in all sizes, which makes them as versatile as they are clean. For example, 
a fuel cell can be reduced to fit inside a portable music player - or be increased to the size of a 
refrigerator to power a house, office, or apartment. Fuels cells are also reliable. Manned 
spacecraft and submarines have been using them for decades because they don't produce toxic 
emissions and thirsty crews can drink the pure water emitted as a waste product. 

Advantages of Fuel Cells 

- 70% to 85% of the energy obtained from the fuel in a fuel cell can be converted into power 
and heat compared to coal or oil, which is around 35%. 

- Fuel cells are inherently reliable, rugged, quiet, and versatile and they can be used to 
power almost anything from a hearing aid to an office building. Currently, fuel cells are 

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being developed to power cars (every major automotive manufacturer in the world now 
has a fuel cell vehicle in development), buses, boats, trains, planes, consumer electronics, 
portable power units, and wastewater treatment plants (where the methane produced by 
the wastewater is used as a fuel source). 

- Since fuel cells are smaller than coal-fired furnaces, less land is required to set them up as 
compared to traditional power plants. 

- The pure water emitted as a waste product from a fuel cell can always be put to good use. 

- Recent breakthroughs in fuel cell technology have produced electricity from carbon and 
bacterial enzymes, which eliminates the need for precious metals (such as platinum). 

Disadvantages of Fuel Cells 

- The price of electricity produced by fuels cells makes the technology somewhat prohibitive. 
Fuels cells big enough to power businesses cost tens of thousands of dollars, which means 
that they can take over a decade to pay for themselves. Slowly, however, fuel cell costs are 
coming down. In 2002, electricity produced by fuel cells averaged over $1,000 per 
kilowatt. In 2009, the US Department of Energy reported that volume production fuel 
cells for the automotive industry were producing electricity at $61 per kilowatt (the goal is 
$35 so as to compete with internal combustion engines). Depending on the cost of the 
hydrogen source, and if the amount of platinum used in fuel cells can be reduced (or 
replaced), a two-kilowatt fuel cell could, in theory, provide power at around ten cents per 
kilowatt in the next ten to twenty years. 

- Long-term performance estimates for fuel cells have not yet been determined - although, 
to date, most fuel cells require maintenance overhauls every five years or so. 

- For more information visit: www.fuelcells.org or the U.S. Fuel Cell Council website at: 
www.usfcc.com. 

Micro-Hydro Power Stations 

Micro-hydro stations use natural water flows from rivers and streams to produce 
hydroelectricity The turbines they house are small so they blend into natural settings while 
producing enough electricity to power several hundred homes or businesses. Micro-hydro 
stations are particularly viable in areas where industrialists during the 18th and 19th centuries 
built now-unused weirs to turn water wheels that powered looms and other industrial 
machinery. To read more about micro-hydro stations visit: http://www.energysavingtrust. 
org.uk/Generate-your-own-energy/Hydroelectricity or, http://www.absak.com/ 
library/micro-hydro-power-systems. 



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For More Information about Micro-Power... 

When it comes to energy, or any resource for that matter, payback is always better than pay 
more. With the rising cost of fossil fuels showing no signs of abatement, and carbon emissions 
placing increasing levels of stress on the environment (and the purse strings of businesses), 
micro-power is an ever more appealing option. On a broader scale, the more efficient and 
energy independent a nation's businesses become, the less the government has to spend on 
expanding and building electricity plants. For these reasons and other reasons, a growing 
number of building owners, managers, and governments are wondering why they did not take 
advantage of micropower sooner. More information about sustainable micro-energy sources is 
available at: www.clean-energy-ideas.com, or www.alternative-energy-news.info, or 
www.eere .energy.gov/greenpower. 

In the meantime, download the (free) booklet The Lean and Energy Toolkit at: www.gov/ 
lean/toolkit/LeanEnergy Toolkit.pdf . The material in this publication is specifically 
designed to help businesses reduce their power needs. It is highly recommended, that a 
complete in-house energy reduction programme be implemented before buying into any 
micro-power system to ensure that your business ends up purchasing the least amount of 
equipment needed. 



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PRODUCT 



Because of the vast quantities of materials and energy that most 
products require, not to mention the huge amounts of waste they 
produce while they're being manufactured, making products more 
efficient (and more efficiently) is crucial to reducing the costs of 
running a sustainable business. To be sure, redesigning products 
and the methods used to make them is time-consuming and 
arduous; however, many practitioners attest that it is one 



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18. The Hidden History of Products 



Ever wondered what is involved in the making of a Styrofoam cup or a pair of blue jeans or 
even one serving of a hamburger, fries and a soda? What about the costs involved? How much 
do a business's products really cost before they are made and how much do they cost the 
business after they have been sold? Most of us are blissfully unaware of the genealogy of the 
products we use as well as the trail of waste and inefficiency products leave behind. For 
example, take a look at the making of a typical aluminium can for the UK soft drink industry 
(provided here courtesy of the Lean Enterprise Institute). 

To make aluminium, bauxite is needed. This reddish, clay-like ore is mined in Australia, 
Jamaica or Guinea and is then transported to a local chemical reduction plant (or a smelter). 
One ton of bauxite is needed to produce a half-ton of aluminium oxide. When a sufficient 
amount of aluminium oxide has been collected it is taken from the smelter, loaded onto a ship 
and sent to Sweden or Norway (a journey of one month across two oceans). Next, the 
aluminium oxide is dissolved in a salt solution and zapped with powerful electric currents that 
purify it (electricity is cheap in these countries, which is why the process is done there). Making 
about half a kilogram of aluminium from aluminium oxide, which amounts to 34 beverage cans, 
requires 7.5 kilowatt-hours of electricity - or enough energy to power a home or small business 
for a single day. The electrical process reduces the aluminium oxide by half before what's left is 
shaped into ingots and trucked to a different part of Sweden or perhaps Germany. The ingots 
are then heated in ovens and pressed into thin sheets that are rolled and trucked to another 
country where they are rolled and pressed again. Following these procedures, the sheets are 
shipped to the UK where they are punched and formed into cans. 

Next, the cans are washed, dried, primed and painted. After a thin lacquer has been applied, 
the cans are flanged and sprayed with a protective film that prevents them from corroding. The 
empty containers are then sent to a bottler where they are washed again and filled with a 
beverage. The beverage contains sugar harvested from beet fields in France (or cane fields in the 
tropics) as well as phosphorous from mines in Idaho (in Idaho, the 24-hour phosphorous mining 
process consumes, in one day, an amount of electricity equal to that required for the daily needs 
of a city of 100,000 people). After the beverage has been made it is squirted into the aluminium 
cans, which are then sealed at a rate of 1,500 cans per minute. The cans are next inserted into 
cardboard packaging (derived from trees cut down in Canada, Sweden or Siberia) and loaded 
onto pallets. More shipping ensues as the cartons are transported to supermarkets and vendors 
across the UK. On average, the finished product is purchased within three or four days and 
consumed within a week. Drinking the beverage takes a few minutes and throwing the can 
away takes a few seconds. All in all, the entire process takes about 319 days. Small wonder that 
even a one-percent reduction in the aluminium needed to make a beverage can is enough to save 
manufacturers $20 million a year - or that recycling just one aluminium can saves enough 
energy to power a television set for three hours. 

Plastic is another material used to package soft drinks, yet bottles made from plastic, like 
their aluminium counterparts, create their own unique waste trail. The total mass of a typical 
one-litre plastic container, for example, contains 25 grams of non-recycled polyethylene 
teraphthalate (PET). Making half a kilogram of PET requires over 6.5 kilograms of oil, 294 
kilograms of water, and emits 3.7 kilograms of greenhouse gas emissions. This means that 
every one-litre PET bottle requires 162 grams of oil and over 7 litres of water to produce - while 

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emitting around 100 grams of greenhouse gas emissions (which is as much as the average car 
produces driving half a kilometre). Keep these figures in mind when taking into account that 
Americans throw away approximately 2.5 million plastic bottles an hour. 

Shipping and distribution merely increases the trail of waste. Transportation emissions are 
measured in grams (in units of C02 equivalencies) per metric ton, per kilometre. Container 
ships emit about 17-grams of C02 per ton, per kilometre. Trains release 56-grams per ton, per 
kilometre; trucks spew out 102-grams per ton, per kilometre; and jet aircraft emit 570-grams 
per ton, per kilometre. When the costs of packaging and marketing, as well as a profit margin, 
are factored in, a one-litre container of bottled water can end up costing two to five times more 
than a similar amount of petrol - or 50,000% more than tap water (which is ironic when one 
considers that many brands get their product straight from municipal taps.). 1 

Ecological Rucksack 

The proper term for the amount of waste a product generates as it winds its way through 
production (and its lifecycle) is called ecological rucksack — and almost every product carries a 
greater load than meets the eye. For example, according to Friedrich Schmidt-Bleek, formerly of 
the German Umweltbundesamt and the Wuppertal Institute, an ordinary cotton T-shirt carries 
an ecological rucksack of approximately 4,584 kilos. 2 How? First, the processes behind the 
growing of the cotton must be taken into account including the manufacture, transportation 
and distribution of fertilisers, herbicides and pesticides. Irrigation equipment (and water 
usage), farm machinery, and petrol - as well as the processes behind these items - must also be 
factored in. Next come the steps involved in turning the cotton fibres into thread. Weaving, 
dyeing, packaging the completed product and transporting it to retail outlets results in the 
creation of even more waste. Additional factors to consider include after-sale practices such as 
the efficiency of the washing machine the customer uses, the use of hot or cold water (hot water 
uses more energy), whether the shirt is air dried or put in a tumble dryer, and so on. Every 
process produces some form of waste. 

To be sure, the waste estimation of a product is dependent upon how far back its materials 
can be traced, which makes any study highly subjective. Estimates claim, however, that a 
semiconductor chip can leave behind 100,000 times its weight in waste during its 
manufacturing process and the making of a laptop computer produces 4,000 times its weight in 
waste. The production of platinum creates 250,000 units of waste for every unit of precious 
metal created and every gold ring leaves behind approximately 400,000 times its weight in 
waste. The manufacture of one ton of paper requires the destruction of 20 trees and enough 
electricity to power the average home for six months. Two-quarts of petrol are needed to 
produce one-quart of orange juice - and one serving of a hamburger, fries, and a soft drink 
requires 7,000 litres of water. With statistics like these, it easy to see how raw material use in 
the United States multiplied 17 times between 1900 and 1989 while the country's population 
multiplied only three times. 

Why is Waste (and Its Costs) so Difficult to See? 

Mention the amounts of waste most products leave behind and many people roll their eyes 
under the assumption that the numbers are being exaggerated to prove a point. 'How can a 

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quart of orange juice require two-quarts of petrol to produce?' a student once asked me, 'that 
means orange juice should cost twice as much as petrol.' 

What he and others are not considering is that mass production, bulk raw material costs, and 
mass transportation not only lower the costs of making a product they also hide the cost of 
waste. I will use a city public transport ticket to illustrate this point. In many parts of the world, 
a $1 or $2 ticket enables a passenger to board a bus or a light rail service and either get off at the 
first stop or stay on until the vehicle reaches the end of its route. Although the lengthier 
journey requires more energy and produces more waste, it is not reflected in the price of the 
ticket (which is low and remains constant). This is the logic that many sceptics use to try to 
prove that product waste is not an issue. In other words, since the price of the ticket remains 
the same, the reasoning is that the bus or train cannot be using more fuel during its longer 
journey or be producing more waste. Understanding mass production economics is the key to 
rectifying this misconception. The general rule is that when production volume doubles, the 
price of whatever is being produced tends to drop 10% to 30% even while waste outputs 
increase. Put another way, by selling more, the costs of raw materials and waste spread out and 
seemingly disappear. 

Hidden Poisons 

Just as worrisome as a product's trail of waste is the amount of toxins that are found in - or 
are used to make - everyday products. The average television, for example, contains 4,000 toxic 
chemicals (200 of which emit hazardous fumes when the TV is turned on) and many buildings 
are insulated with formaldehyde-laden particleboard that heavily pollutes indoor air. The 
average PC consumes ten times its weight in hazardous chemicals and fossil fuels to complete 
its production (in India and China alone, about 70% of arsenic, lead, cadmium, chromium, 
cobalt, mercury and other heavy-metal pollutants come from electronic waste created just by 
computer manufacturers). If that isn't enough, of the over 8,000 chemicals used to dye clothes 
and fabric, less than .004% are actually considered non-toxic. Even glues and paints contain 
solvents that steadily pollute the air long after they are dry. 

Ten Ways to Minimise Product Waste 

The key to reducing ecological rucksack is innovative thinking in the form of product waste 
minimisation, a design process that goes beyond the examples of a carpenter examining a piece 
of wood before it's cut to ensure that all its pieces will be useable afterwards - or a dressmaker 
arranging pattern pieces on a length of fabric to reduce wasted cloth. True waste elimination 
takes into account the waste created during the production of a product while reducing the 
product's potential to create waste during and after its use. For example, when designers at 
Nike Inc. tried to manufacture shoes in a sustainable way, they ran into problems because they 
still used traditional materials and specifications. Roadblocks were overcome by developing 
product engineering concepts called "considered design" principles with the aim of reducing 
environmental impact, eliminating waste, using environmentally sustainable materials and 
eliminating toxins in manufacturing processes and the shoes themselves. Nike estimates that 
this will reduce waste in its supply chain by 17% and increase its use of sustainable materials 
by 20%. 



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Following are ten common guidelines 3 designed to reduce product waste: 

1. Carefully design the product beforehand so that the amount of resources and raw 
materials used to make it are reduced (and optimised) and can be used in a closed-loop 
recovery system. In the past, product design was based on appearance, function and 
financial profit. Today's goods need to add 'material recovery' and 'reduced complexity' to 
the list in regards to the two types of raw materials that constitute most products: 
technical and biological. Technical materials are synthetic or mineral and can remain in a 
closed-loop system of recovery and reuse. Biological materials are biodegradable and 
should be returned to the environment where they can be broken down safely and 
organically. For example, the 'gDiaper' came into existence after its inventors learned that 
approximately 38,000 'disposable' diapers go into landfill sites in the USA every minute 
and each takes 500 years to decompose. gDiapers are made from biodegradable materials 
that are put together using environmentally friendly production methods. This means 
that unlike their wasteful counterparts, gDiapers contain no elemental chlorine, no 
oil-based plastics, no perfumes and no smell. They are so benign that they can be flushed 
down a toilet or composted in a garden after use. 

Reducing the complexity and/or number of components in a product minimises waste, 
labour and manufacturing costs. For example, in the USA a toilet valve was redesigned by its 
manufacturer and ended up weighing seven times less, went from 14 parts to one moulded part, 
and had its production costs reduced by 80%. Meanwhile, a windshield wiper was re- 
engineered, went from 49 parts to one, and could therefore be manufactured at a lower cost 
despite the fact that the new product was made from more expensive carbon fiber. 4 

2. Design products so they can be easily disassembled after use. One of the more important 
aspects of product waste minimisation is called 'designing for disassembly' 5 , which allows 
a product to be quickly taken apart at the end of its life for recycling or remanufacture 
(more about this later). Designing for disassembly involves: 

- enabling the removal of the product's parts without damaging them (including the quick 
removal of all fasteners and connectors), 

- clarifying and simplifying the parts classification process (thereby making it easier to 
determine which parts can be reused, remanufactured, or recycled), 

- maximising all reuse, remanufacturing, or recycling processes, and, 

- ensuring the processes that sort, separate and purify disassembled parts does not create 
waste. 

3. Reduce the hazardous makeup of the product. Lower or eliminate the toxicity of a 
product's raw materials or parts by replacing them with non-toxic alternatives. Reducing 
toxin use helps eliminate the (often unconsidered) expenses induced by hazardous 
materials. These costs include: (a) specialised handling and packaging requirements, (b) 
specialised transport needs, (c) health and safety costs, (d) specialised equipment 
expenses, (e) employee training expenses, and, (f) specialised disposal costs. 

Examples include: In Poland, a street light manufacturer discovered a way to replace the 
methylene chloride used to make its products with an environmentally safe alternative and saw 
its costs plummet. The Hollywood Memorial Hospital in Hollywood, Florida replaced the 

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hazardous mercury-based batteries in its portable cardiac monitoring equipment with 
environmentally friendly zinc-air batteries. Although the new batteries cost 15 cents more, they 
reduce costs by more than 25% because they last longer and they lowered the hospital's mercury 
waste by 155 kilograms annually. In Sweden, chemist Mats Nilsson discovered a name 
retardant chemical that's both harmless to humans and safe for the environment. Currently, 
the most widely used flame retardant in the world (bromide) is lethal, yet the danger is seen as a 
price worth paying for reducing the flammability of clothing. Derived from grapes and citrus 
fruits, Nilsson's alternative can be used in applications from mattresses to high-tech goods to 
kid's clothes and is set to revolutionise the flame retardant industry while reducing bromide 
levels around the world. 6 Nilsson's work is a good example of 'biomimicry' - replacing toxic or 
hazardous production processes with safe, sustainable, and biodegradable alternatives. Carpets, 
chemicals, clothing, medicines, motor oils, and plastics are just some of the products that can 
now be created by biological organisms in a safe and environmentally sustainable manner. 7 

4. Switch to non-hazardous manufacturing methods. Manufacturing processes that rely on 
hazardous chemicals, heavy metals, refrigeration or combustion are usually more 
expensive than they appear. For example, the GlaxoSmithKline pharmaceutical company 
in Verona, Italy reduced the environmental impact of manufacturing a chemical being 
tested to treat chemotherapy-induced nausea and vomiting. Originally, the method for 
making the chemical relied upon subfreezing temperatures that required huge amounts of 
energy and produced significant amounts of waste. The improved process removed a 
number of hazardous substances from the production of the chemical, reduced the need 
for extremely low temperatures (which saved energy), reduced waste by 75%, and lowered 
the cost of raw materials by 50%. 8 In another example, a laboratory in the United States 
that manufactures biological slides used a toxic solution made from mercury to prepare its 
specimens. The laboratory could not find an alternative for the mercury solution until one 
day one of the lab workers jokingly suggested using the soft drink he had just purchased 
(7-Up). It worked. Since 7-Up is safer and cheaper than the costs of mercury it helped the 
lab reduce expenses. 

5. Reduce the amount of energy required to make the product and use sustainable energy 
sources. Examples include: 

- using energy-efficient equipment in production processes (more about this later), 

- using remanufactured material in the product's makeup, and, 

- using sustainable energy supplies (i.e.: wind or solar energy) from major energy producers 
or using micro-energy sources to supplement the powering of 

production equipment. 

6. Use newer and cleaner technologies whenever possible. Many products can be made more 
efficient by teaming them with new technologies. Examples include containers that safely 
and effectively store liquids yet are still biodegradable; tubular skylighting, which captures 
outside light and redirects it into buildings; transmitting subscriber-based news and 
information over the Internet instead of printing it (university courses can also benefit 
from this practice, which eliminates the need for students to travel to a classroom); and 
the eCube, a device the size of a hockey puck that attaches to a refrigerator's temperature 

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sensor (the eCube prevents the wasteful turning on of the cooling unit every time the 
refrigerator door is opened, which can reduce energy requirements by up to 30%). 
Meanwhile, Proctor & Gamble super-concentrated its detergents so they fit into smaller 
containers, thereby eliminating 40,000 truck deliveries annually. In 2007, Wal-Mart 
announced that it would begin a transition toward selling only similarly concentrated 
laundry detergents, which use less water and therefore require less packaging and space 
for storage. Every major supplier in the detergent industry has now become involved. 

7. Use sustainable re-manufactured, recycled or scrap materials to manufacture products. 
Closed-loop practices allow the original raw materials, energy and manpower of a product 
to be recaptured and used again. For example, in 2004, the 3M company reformulated a 
brand of carrier tape so it could be manufactured entirely from the waste materials of 
other products. The new product, which is made of 100% recycled material, not only costs 
less to make, it also reduced the plant's waste by 120 tons in the first year of production. 
Similar examples include efficient-minded paper companies that return damaged rolls to 
their production lines and plastics manufacturers that take off-cuts and re-incorporate 
them into their machining processes. 

8. Improve quality control and process monitoring in all production processes. By increasing 
the frequency of production inspections (as well as the number of inspection points) and 
displaying real-time production information, most production problems can be identified, 
stopped and corrected at an early stage before waste becomes a problem. For example, 
American retail giant JCPenney's installed a computer programme that shows ongoing 
electricity use in several of its stores in 15-minute intervals. Any spike in power usage is 
immediately investigated by employees. 

9. Find ways to have products returned to their place of manufacture so they can be 
disassembled, harvested and used to make new products. By rewarding customers for 
returning used products, a steady supply of (free) raw materials is maintained and 
relationships with customers are strengthened. 

10. Reduce packaging requirements, use recyclable packaging material or find ways to 
eliminate packaging altogether. Less packaging saves money in two ways: it reduces 
production expenses and it reduces waste disposal costs. A Pollution Prevention Pays 
team at 3M, for example, redesigned the packaging of Post-It notes by eliminating 
cardboard back cards and blister covers from every unit. The result saves the company 
over $350,000 annually and eliminates 35 tons of waste every year. 

Additional examples of companies that have used these guidelines in one form or another to 
reduce waste and costs and promote long-term profitability include: 

- Clorox recently unveiled its first new brand in 20 years (Green Works), the initial launch of 
which includes five cleaning products that are at least 99% natural. The company 
subsequently won a rare endorsement from the Sierra Club for its efforts. 

- In a bid to become more competitive, floor-cleaning machine manufacturer Tennant 
declared itself an environmental solutions provider and then lived up to its new label by 
designing a floor cleaning apparatus that uses electrically charged tap water to clean floors 
without costly chemical cleaning solutions. The toxin-free result has been confirmed as 

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superior to everything else on the market. Talk about a 'game changer!' 

- The Nitech company (a battery manufacturer) replaced its disposable batteries with 
rechargeable batteries and developed a new product line. 

- The Hoover washing machine company created a new range of washing machines that 
reduce energy, water, and detergent consumption. The new designs won several awards 
and have dramatically increased profits. 

- Frigidaire improved its refrigerators by reducing chemical levels, improving the efficiency 
of its motors, improving compressor design, developing better seals and gaskets, and 
designing smaller refrigerator doors (which helps keep cold air in). Increased profits 
followed. 

- Stelrad Ideal (Caradon Heating) improved its line of domestic boilers by using flue heat to 
supplement the heat produced by the boiler's gas burner - thereby boosting the efficiency 
of its product to over 95%. 

- SC Johnson Wax made a pledge to develop product packaging from 100% recycled 
materials. The change saved the company much money and generated lots of welcome 
attention in the press. 

- The Trannon furniture company developed a whole new range of sustainable products 
from locally-grown forestry thinnings and coppiced wood. As a result, the company won 
several awards. 

- Pax designed a new line of air gun pellets (under the brand name Prometheus), all of 
which are lead free. Since 80% of Prometheus pellets are sold to farmers in Indonesia for 
pest control, this has greatly reduced the amount of lead detected in paddy fields. What's 
more, Pax now uses the waste plastic from the production of its pellets to make 

its packaging. 9 

The bottom line: public expectations about corporate sustainability efforts are continually 
rising. To future-proof products (i.e.: to insulate them from risk and uncertainty) reduce waste 
in all phases of their lifecycle to avoid new legislation, increases in raw materials expenses, and 
bad publicity. Forewarned is forearmed. 



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19. Minimising Packaging 



Packaging comes in many shapes and forms: boxes, bags, cans, foam pellets, shrink wrap, 
tubes, paper, etc. Its purpose is to protect a product and keep it fresh. Additional benefits 
include enhanced attractiveness and protection from tampering. The three most common types 
of packaging are: 

- Primary packaging, which is the wrapping or container handled by the consumer. 

- Secondary packaging includes larger cases, boxes, or bags used to group goods for 
distribution, ease of carrying, or display in shops. 

- Transit packaging refers to pallets, boards, plastic wrap, and containers used to collate 
products into larger loads for shipping. 

Despite the benefits that packaging provides, many products contain too much. This is 
annoying to those who have to pay to throw it away. Wal-Mart, for example, recently unveiled a 
packaging 'scorecard' to its suppliers demanding that their packaging be reduced by at least 5% 
(Wal-Mart discovered that up to 20% of its garbage was directly attributed to packaging). By 
issuing this edict to its 60,000 suppliers, Wal-Mart expects to reduce solid waste by 25% and 
shave $3.4 billion off operation costs. 

The improved milk jug is an excellent packaging improvement example. Many plastic milk 
jugs are now more cube-shaped, which lowers packaging expenses by 10 to 20 cents per jug. 
Square containers also store 50% more milk per square metre so more milk can be put on trucks 
thereby reducing trips and fuel costs. Sam's Club (a division of Wal-Mart) says that these jugs 
allow for almost three times the amount of milk to be placed in coolers and eliminate over 
11,000 truck journeys annually. 

Reducing the Costs and Waste of Extraneous Packaging 

Since packaging is responsible for a substantial amount of waste, and waste is always a sign 
of wasted money, reducing the amount of material that surrounds a product is a good way for a 
business to decrease its expenses. How much packaging delivers true customer satisfaction? 
Knowing the answer to this question can lead to a substantial reduction in costs as well as the 
elimination of extraneous materials that nobody wants or needs. Tried and tested 
suggestions include: 

- Use the least amount of packaging possible (or better yet, none at all). Estimates claim 
that up to 98% of secondary packing (i.e. : a box outside a box, a bag outside a bag. . .) and a 
significant amount of primary packaging can be reduced without any perceived decrease in 
the quality of the product or its package. In Australia, for example, several small business 
manufacturers have been able to save up to $30,000 a year by reducing the packaging 
surrounding their products. 1 In the USA, the State Farm Insurance Company in 
Bloomington, Illinois saved $23,100 in annual packaging costs by eliminating unnecessary 
shrink-wrap from the booklets it distributes. 2 

- Redesign packaging to reduce material use. Sometimes a small change in the design of a 
package can significantly reduce the cost of raw materials. For example, Anheuser-Busch 
reduced its aluminum usage by 9.5 million kilos per year by shaving a third of a centimeter 
off the rims of its beer cans. In 1989, the Digital Equipment Corporation in Maynard, 
Massachusetts made it a priority to reduce packaging materials and subsequently 

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redesigned the amount of packaging used to ship metal computer cabinets. As a result, 
the company saved $300,000 in one year. Furthermore, by using bakery racks on wheels 
in place of disposable packaging to transport sheet metal parts from one area of a plant to 
another, the company saves an additional $200,000 annually 2 

Reuse packaging materials and containers whenever possible. Extending the life of 
packaging materials saves money. The 3M corporation's plant in Valley, Nebraska, for 
example, worked with a supplier to produce returnable packaging that reduced shipping 
waste by eight tons and saved over $1,500 per shipment in packaging and disposal costs. 
Other companies have begun similar policies by asking customers if they mind having 
their purchases placed in used packaging (apparently, most customers don't mind a bit). 
Some CEO's consider this practice to be so financially advantageous, that they see 
re-useable packaging as akin to being given money by suppliers. 

Repair and re-use heavy-duty shipping materials. This is particularly true with pallet 
shipments. For example, like many large companies, Wilton Industries paid over 
$100,000 every year for approximately 14,000 new pallets. Now the company saves 
$64,400 annually by repairing and reusing damaged pallets and avoiding unnecessary 
pallet disposal costs. 

Use recycled materials from sustainable, renewable sources or alternative materials (such 
as wheat straw) whenever possible for packaging. With the third largest emitter of global 
pollution in the world being the pulp and paper industry the benefits of this practice 
cannot be overstated. 

Maximise the amount of material shipped on pallets and in vehicles. This practice alone 
has saved many companies millions of dollars a year in shipping costs. For example, 3M 
Inc.'s St. Ouen L'Aumone facility in France developed a new stacking system that allowed 
more materials to be packed onto transport vehicles. The new system has doubled load 
capacity, reduces the number of daily truckloads by 40%, saves 47,316 liters of fuel, and 
cut transportation costs $110,000 per year. 

Use cardboard edges on the corners of large items (or those shipped in bulk) and shrink 
wrap what remains rather than boxing each item separately. This practice saves furniture 
maker Herman Miller, Inc. (of Zeeland, Michigan) $250,000 every year in packaging costs 
with just one of its products. 

Use thinner, stronger, and more opaque paper for paper packaging needs. 

Replace cardboard boxes with more durable, reusable containers. This is especially 
advantageous for warehouses or interdepartmental shipments. In Cottage Grove, 
Minnesota, a 3M facility designed collapsible, reusable steel crates robust enough to stack 
on top of one another. As a result, the company avoided producing 315 tons of solid 
waste and saved $101,800 in the first year alone. 

Ask suppliers to accept returnable containers and packaging materials. Automotive giant 
General Motors did this and slashed over $400 million from its supply chain costs. 

Sell unused packaging waste to a recycler. Contact a local waste disposal company or 
public works department for details. 



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- Work out a shipping system that reduces the time it takes to package and send items. 
Generally speaking, the more time it takes to package and ship products the more it costs. 

It's Not Just Good Business, It's the Law 

Local, state and federal governments are passing laws making it mandatory to return 
products and their packaging to the point of origin after use. Recyclable materials such as paper 
and plastic are being banned from landfill sites in a bid to force economical use. The day may 
soon come when products - and their packaging - will be tagged with a toll free telephone 
number or a bar code so that they can be identified and picked up at the end of their useful life 
for reuse, remanufacturing, or recycling purposes. Stay ahead of the curve. 



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20. Reuse, Remanufacturing, and Recycling 



Of all the sustainable options available, the simplest and most cost effective is to reuse a 
product (or its components) as many times as possible without altering them in any way. 
Stewart's Shops in the northeastern United States, for example, has been using refillable glass 
soda bottles and plastic milk bottle containers in its over 200 stores for more than 40 years. 
Stewart's milk bottles are reused around 50 times before they're replaced (which saves the 
company five cents per bottle). The company's soda bottles are reused about 20 times, thereby 
saving 14 cents per bottle. With sales of more than twelve million bottles annually, these 
savings add up. One programme in particular that Stewart's is involved with sells milk in 
refillable bottles to a local school. Since the bottles are reused 100 times before being replaced, 
the school's waste has been reduced by 700,000 milk cartons per year, which dramatically 
lowered the school's disposal and 
purchasing costs. 

In a similar product reuse story, the Ashbury Park Press in Neptune, New Jersey changed its 
machine-cleaning procedures by switching from disposable rags to reusable cloth rags. Even 
though the reusable cloth rags must be laundered, the company still enjoys an annual cost 
savings of $36,400. Further west, in Minnesota, the Itasca County Road and Bridge 
Department replaced the disposable air filters in its garages with reusable filters. The switchover 
means that a bit of extra labour is needed to clean the reusable filters, but fewer filter purchases 
and reduced disposal expenses amount to thousands of dollars in savings every year. 1 

When Extending the Life of a Product, Quality Counts 

The ability to extend the life of a product is reliant upon quality - and, as most people are 
aware, quality usually costs more. The good news is that the extra cost of quality almost always 
results in the ability of a product or its materials to be used longer - and the longer a product is 
used the less expensive it becomes (as the old adage says, 'if you buy cheap, you buy twice'). 
Take, for example, another cost-saving example made by local authorities in Itasca County, 
Michigan. County buyers chose to purchase only one brand of high quality chainsaw instead of 
a multitude of cheaper chainsaws. The more expensive purchases were approved after county 
officials factored in the savings from the longer product life of higher quality combined with the 
ease with which the quality chainsaws could be repaired. Furthermore, when it came time to 
make repairs, the county saved even more money because parts from the higher quality saws 
could be used as repair replacements (something that couldn't be done with the cheaper saws). 
This practice not only helped extend the life of the remaining saws (thereby reducing the 
number of new saws needed) it also reduced the disposal costs associated with throwing away a 
used chainsaw. 

Product Life Extension 

Reusing products and their materials is a win-win situation for all involved. From a 
customer's standpoint, reusing a product decreases waste, reduces disposal costs, and lowers the 
expense of purchasing replacements. From a manufacturer's viewpoint, similar savings occur. 
At some point, however, a product or its parts may undergo too much wear and tear and be 
deemed unsuitable in a reuse application. This does not mean that the product or its parts have 
reached the end of their useful life. In many cases, they can be broken down into their base 
materials or components in order to be used again for the same or other applications. 

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Remanufacturing (to as good-as-new-condition) 

Remanufacturing to as good as new condition is a three-step process whereby: (1) a used 
product is disassembled, (2) its parts are cleaned and repaired, and, (3) the parts are reassembled 
to a sound working condition. The term 'sound working condition' is key because in some areas 
of the world, reassembled products made from used parts are considered new and come with 
the same guarantees and warranties as products made from virgin raw materials. Conversely, in 
other regions, remanufactured (or refurbished) products must be labeled as such by law even if 
they carry the same warranties. 

A Case Study 

In 1972, Caterpillar Inc, a manufacturer of heavy earth-moving and construction equipment, 
was chosen by the Ford Motor Company to supply diesel engines for a new Ford delivery van. 
Ford's decision surprised a number of people. At the time, the Cummins Diesel Company was 
expected to win the Ford contract because it dominated the diesel engine business partially by 
keeping its costs down through the remanufacturing of used engines. Caterpillar knew that to 
remain competitive and retain its relationship with Ford, it too had would have to keep its costs 
down and increase its knowledge base. So after careful analysis Caterpillar decided to open up a 
remanufacturing plant in Bettendorf, Iowa, close to its Peoria headquarters. The idea was to test 
this new venture and see where remanufacturing would lead. 

Ten years later, convinced that it was moving in the right direction, Caterpillar relocated its 
growing remanufacturing activities to Corinth, Mississippi and set-up shop in an abandoned 
factory building. Land was cheaper in this part of the country and the location was more central 
to the majority of Caterpillar's customers as well as a proliferation of road networks. Three years 
passed before a second Caterpillar remanufacturing operation was opened up across town. 2 
Success met with success and soon thereafter the company began operating a third facility in 
nearby Prentiss, Mississippi. Today, Caterpillar's Sawyer plant in Corinth receives worn engines 
and assemblies from all over the country - mostly from dealers who send the company around 
160 tons of used equipment (about 17 truckloads) every day. The items Caterpillar finds 
suitable for remanufacturing include engines, fuel pumps, injectors, oil coolers, cylinder packs, 
and hydraulic assemblies - each of which must be exhaustively taken apart by hand. On average 
it takes two workers a half-day of hard work to reduce one engine to its components. Every 
piece, including the tiniest screw, is saved because employees have been taught that anything 
placed in the trash is money thrown away 3 

Almost every part that Caterpillar tries to salvage is embedded with grease, oil, carbon 
build-up, paint, or rust. A mixture of baking soda with 10% alumina grit is needed to remove 
these contaminants. Afterwards, the scrubbed parts are sent away for inspection and sorting 
and the waste used to clean the parts is collected and used as a reagent in the neutralisation of 
acidic liquid waste - a process that renders both liquids non-hazardous and has reduced the 
company's annual liquid waste from over 4 million kilos to just over 2 million kilos. 4 Of course, 
not everything is recoverable. The parts and materials that aren't suitable for remanufacturing 
are passed on to the company's foundry in Mapleton, Illinois, where they're melted and recast. 
In 1999, Caterpillar's foundry recycled 106,835 kilos of aluminum alloy; 7,650,312 kilos of cast 
iron; and 2,576,679 kilos of steel. 

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It hasn't all been smooth sailing. One of the difficulties inherent in remanufacturing is 
maintaining a steady stream of used equipment. Without prior preparation it's quite possible to 
receive several truckloads of used products one week and then nothing for several weeks 
afterwards. Caterpillar eliminates this problem by offering its customers incentives that make 
them unwitting suppliers in the remanufacturing process. For example, when a customer needs 
a new part or a new piece of equipment, he or she is first asked to submit the old one. The 
customer is rewarded with a new part at up to half its full price. If the customer does not hand 
in the old part, the full price is charged. 

Additional lessons have also been learned. By designing and producing higher quality parts 
in advance, Caterpillar has discovered that it can get two or three lives out of its products. 
Manufacturing a component with another millimeter layer of metal on it may cost more, but 
the company knows that this investment will ultimately yield more profits because the 
improved product can be remanufactured. For example, Caterpillar estimates that it can 
remanufacture a good engine three times before it simply can't be used again - a practice, which 
produces such substantial profit margins that more than $1 billion worth of sales were reported 
in 2005 at Caterpillar's Corinth operation alone. 3 Before the recession of 2009, this number 
grew at least 15% annually. 

Further savings are derived at Caterpillar from the company's commitment to reuse and 
recycle common work materials to add to its remanufacturing processes. For example, the wood 
pallets on which most equipment arrives are regularly inspected, repaired, and reused. When 
they can no longer be repaired they're sold to a packaging company as boiler fuel. Similar waste 
reduction systems are in place to reduce office paper, aluminum cans, computer equipment, and 
cardboard packaging. Today, 96% of the waste stream at Caterpillar's Corinth plant is either 
reused or recycled - making the programme so successful that it's sparked off similar 
programmes in local schools, government offices, and 15 nearby industries. 5 

The Basics 

For all the dirty work involved, the costs of revitalising a previously manufactured product 
can be 30% to 70% less than creating the product from scratch. This is because remanufacturing 
conserves the original energy, materials, labor, and manufacturing effort that exist in 
every product. 

Generally speaking, in many manufacturing processes 70% of the cost of producing a 
product from scratch is needed for materials and 30% pays for labor. Remanufacturing tries to 
recover the 70% of material costs invested in the original product. 

How much energy and materials can be exhumed from a remanufactured product? 
According to studies undertaken by Dr Rolf Steinhilper formerly of the Fraunhofer Institute in 
Stuttgart, Germany, (he is currently at the University of Bayreuth) the energy savings derived 
from remanufacturing worldwide equal the electricity generated by five nuclear plants or 
10,744,000 barrels of crude oil carried by a fleet of 233 oil tankers. In addition, the amount of 
raw materials saved would fill 155,000 railroad cars and form a train 1,770 kilometers long. By 
avoiding these expenses, remanufacturing allows companies the choice of offering lower cost 
product ranges to customers while enticing new buyers into markets where the price of 
introducing new products is seen as prohibitively high. 6 Refurbished (i.e.: remanufactured) 

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computers, for example, particularly laptops and PC's, are renowned for offering exceptional 
value-for-money. 

The Economic Advantages of Remanufacturing 

Over 70,000 firms in the United States, most of which employ 20 people or less, are involved 
in remanufacturing. Because these firms are virtually unknown, remanufacturing is often called 
the 'invisible industry'. Together, these businesses accumulate over $50 billion in annual sales 
and directly employ over half-a-million workers. If all the people indirectly employed by 
remanufacturing were added to the latter figure (e.g.: suppliers, distributors, retailers, installers, 
service providers, etc..) it has been estimated that the total number of people involved would be 
in the millions. 6 Evidence has shown that most remanufacturing firms also do well during times 
of recession and that no end to the industry's growth is in sight. According to researchers 
Robert Lund and William Hauser, the total financial value of products that could be 
remanufactured is around $1.4 trillion. With only $50 billion worth of goods currently being 
remanufactured, this suggests that the potential of the remanufacturing industry has yet to be 
fully tapped. 

Despite the positive outlook, however, remanufacturing is virtually ignored by most 
businesspeople, which is why it's called the stealth business model. Those who study the 
remanufacturing industry say this invisibility is due to the wide dispersion of remanufacturers, 
the diversity of products they breathe new life into, and the small size of the majority of players. 
With the profit margins of remanufactured goods as high as 40%, however, one can only wonder 
why more businesses aren't taking advantage of this practice. 

The Challenges Involved with Remanufacturing 

As with any product process, remanufacturing is not a panacea nor is it suitable for every 
product, market, or business operation. Traditionally, it has proven difficult to remanufacture 
the following: 

- Products that regularly undergo rapid technological changes. 

- Products that take advantage of current or fleeting trends ('Industrial design is a field that 
was specifically invented to convince people that the washing machine, the car, or the 
refrigerator they had was out of fashion,' says efficiency pioneer Walter Stahel, 'and 
fashion is something that can't be remanufactured.') 

- Products specifically designed to thwart attempts to disassemble and rebuild them (an act 
of protectionism to prevent firms from remanufacturing another business's products). 

- Products that are sold at such a low cost that it's cheaper to buy a new version. 

- Markets where consumers consider the terms 'remanufactured' or 'refurbished' to be 
synonymous with low quality. 

Getting Started in Remanufacturing 

Despite the gains that can be obtained from remanufacturing, the commitment to establish a 
remanufacturing setup should not be taken lightly. First and foremost a study should be taken 
of the market potential for the proposed remanufactured product and the company involved 
should be certain that it will not be competing against itself and its other products. A sound 

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marketing plan must also be established to inform new and current customers that 
remanufactured products are just as durable as new products made from virgin raw materials. 
Additionally, employees will need to be educated and trained so they firmly believe that what 
many of them used to call garbage is seen as 'assets in transition'. Equally as important is that 
the company must have the means to locate, recover, and transport its used products and have 
the resources and ability to disassemble, clean, sort, and inspect them for remanufacturing 
(a.k.a.: reverse logistics). For this reason many companies partaking in remanufacturing 
practices find it advantageous to have their disassembly-process employees communicate 
openly and often with their product designers. This allows for a wealth of information to be 
accumulated as to how long-life improvements can be made in original products. In addition, 
tools and equipment may have to be purchased or developed to quality-test remanufactured 
parts before they're used again. Lastly, a plan for properly disposing unusable parts (as well as 
any chemical agents or materials used in the remanufacturing process) must also be developed 
and implemented. 7 

Recycling 

Cascade Engineering, a Grand Rapids, Michigan, plastics manufacturer that makes parts for 
cars and various plastic containers — including trash cans — has cut the amount of trash it sends 
to landfills from 2,475 tons in 2003 to just over 700 tons this year. "We've gone from every- 
other-day pickups to once every couple of weeks," says Kelley Losey, an environmental services 
manager at the company. The secret to this success is recycling. 8 

Although the word 'recycling' is a generic term that often includes the reuse or remanufacture 
of a product or material, for the most part it refers to a process in which used products or 
packaging are collected, cleaned, shredded, melted down, or otherwise reduced to recover their 
basic materials. What remains is used as a total or partial replacement to create something new. 
Virtually anything from building materials to metals to chemicals to paper to plastic to fabrics or 
food and cloth - and in some cases, unused medicine - can be recycled. Even substances at a 
molecular level can be tagged with nanotech markers for later reclamation and recycling. That 
being said, recycling should always be considered after a successful waste minimisation 
programme has been implemented. 

Although recycling is more expensive than reuse and remanufacturing, it often makes 
financial sense because it recaptures the value of raw materials as well as the energy and 
manpower that went into converting them into basic product materials. In some cases as much 
as 70% or more of this value can be reclaimed. For example: 

- Making paper from recycled materials uses 70% less energy and produces 73% less air 
pollution compared with making paper from virgin raw materials. 

- Recycling a plastic bottle saves enough energy to power a 60-watt light bulb for 
three hours. 

- 25-30 plastic one-liter plastic bottles can be recycled into one fleece jacket. 

- A recycled glass bottle saves the amount of energy needed to power a computer for 
25 minutes. 



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- Manufacturing aluminum from scrap requires up to 95% less energy than producing it 
from scratch. 

- In Britain, it's been estimated that if all the aluminum beverage cans in the UK were 
recycled instead of thrown away, the country would need 14 million fewer garbage cans. 9 

Recycling and Job Growth 

According to a White House Task Force study, recycling activities prior to 1998 employed 
more than 2.5% of the USA's manufacturing workers - which amounted to one million jobs and 
more than $100 billion in revenues. Two years after this study was published, recycling was 
credited with producing 1.1 million jobs and grossing over $236 billion in revenues. Indirectly, 
it has been estimated that recycling creates an additional 1.4 million jobs and over $173 billion 
in receipts. According to the Institute for Local Self-Reliance, the United States grew 2.1% per 
year between 1967 and 2000 while the recycling industry enjoyed, on average, an 8.3% increase 
in employment and a 12.7% increase in sales per year. 10 This means that for every 10,000 tons 
of waste that's recycled, around 36 new jobs are created. Compare that to incinerating the same 
amount of waste, which creates one job. 

The Complexities of Recycling 

Despite the good news, recycling is not without its costs and complexities. Many materials 
cannot be endlessly recycled because they weaken or degrade during the recycling process (or 
they have been blended together with other materials and cannot be separated), which means 
that part or all of the original value of the material, energy, labour, and other manufacturing 
inputs that went into making the product is lost, compromised or destroyed (a process called 
'downcycling') Additional labour, energy and manufacturing capital may therefore be needed to 
bring the desired material up to scratch. In terms of strength and mass, for example, aluminum 
is reduced by around half after being melted down in a recycling process and requires pristine 
inputs to meet quality standards. The most common forms of glass, however, can be endlessly 
recycled - a fact that can open up new cost-saving opportunities in terms of packaging and 
building materials (e.g.: liquids that are traditionally shipped in aluminum cans or glass bottles 
can instead be shipped in giant vats and be poured into bottles at their destination, which 
reduces transport costs and carries the potential to create local jobs). Still other materials (such 
as those used to make carpets), actually improve after recycling for reasons that continue to 
puzzle scientists. 

A good way to illustrate the versatility, strength, and weakness of recycling is with plastic. 
Some plastics, such as those made from high-density polyethylene (HDPE), can be recycled 
several times. Others either aren't recyclable or require a percentage of non-recycled material 
added to them so as to maintain an acceptable level of quality. For example: 

1. Type one plastics, polyethylene teraphthalate (PET or PETE), are clear and tough and 
resistant to heat. PET plastics are commonly used to make food and drink containers. 
When recycled, PET plastic shreds can be endlessly converted into recyclable fibers (also 
known as polyester) for clothing, carpeting, fiberfill, and geo-textiles. 

2. Type two plastics are stiff and tough and are made from high-density polyethylene 
(HDPE). Because HDPE plastics have good chemical resistance, they make excellent 

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opaque containers for household and industrial chemicals. When recycled, HDPE plastics 
are reduced to landfill liners, fencing material, flower pots, plastic lumber, recycling bins, 
buckets, oil containers, and benches. 

3. Category three plastic (polyvinyl chloride or vinyl) is commonly referred to as PVC and is 
used to make food containers, medical tubing, wire and cable insulation, clear packaging 
(cling film), plastic pipes (for plumbing and construction), gutters, floor tiles, carpet 
backing, and window frames. When recycled, PVC is often reduced to traffic cones, 
flooring, garden hoses, and mobile home skirting. 

4. Category four plastics, low density polyethylenes (LDPE), are used to make garbage bags, 
dry cleaning bags, shopping bags, squeezable bottles, food storage containers, and flexible 
lids. After recycling, LDPE's are downgraded to floor tiles, shipping envelopes, 

and furniture. 

5. Type five plastic, polypropylene (PP), is resistant to heat, chemicals, grease, and oil and is 
therefore used to make food containers such as margarine tubs, microwaveable trays, 
packaging material, medicine bottles, aerosol caps, and drinking straws. Recycled PP is 
reduced to ice scrapers, rakes, sheeting, traffic signal lights, automobile battery cases, 
brooms, and oil funnels. 

6. Polystyrene (PS) is quite versatile and can be made into a hard, brittle plastic for compact 
disc jackets, combs, pens, plastic tableware, aspirin bottles, etc. Polystyrene can also be 
injected with air (foamed) and molded into Styrofoam packing, grocery store meat trays, 
clamshell containers (used in fast food restaurants), and egg cartons. When recycled, 
polystyrene can be converted into foam packaging, foam plates, thermometer casings, 
light switch plates, vents, and desk trays. 

7. The seventh category of plastic includes plastics that do not fall into the previous six 
categories. One example is melamine, a plastic used to make plastic cups and plates. 
Category seven plastics are often mixed with resins and used in multi-layer configurations. 
Applications include large reusable water bottles, citrus juice bottles, food containers, and 
Tupperware. When recycled, seventh category plastics can be used to make plastic lumber 
and plastic bottles. 

It is important to note that mixing together any of the seven types of plastics often renders 
the result more difficult or even impossible to recycle. 

Recycling and Industrial Waste 

Almost any substance, no matter how toxic or filthy, can be recycled in some way. This is 
particularly true with hazardous substances found in industrial waste that would otherwise 
require specialised and costly disposal methods. Most industrial waste contains potent 
properties that can be used in applications that require large amounts of inherent material 
strength. Foundry sand used in metal casting, for example, can be recycled into sub-base filling 
for road construction, road embankments and structural fill. Coal waste (ash, boiler slag, fly ash, 
flue deposits and desulpherised material) can improve the strength and durability of concrete 
and manufactured wallboard. Material from construction and demolition sites (including 
shingles, scrap wood, and drywall) can be recycled into asphalt paving, re-milled lumber, 

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wallboard, and concrete. 11 Even paint and old tires can be made into high quality caulks and 
flooring. The point is that recycling carries almost endless possibilities. In India, for example, 
discarded plastic bottles and bags are being shredded, melted and added to roadway asphalt to 
improve the integrity, water resistance and durability of paved roads. Apparently, roads 
embedded with melted plastic last three times longer than conventional roads (although keep in 
mind that the environmental impact of this practice is unknown). 

If Recycling has So Many Advantages, Why do So Many Businesses 
Ignore It? 

'So let me get this straight,' a student once remarked, 'reusing, remanufacturing, or recycling 
the products and materials we throw away can (he held up a finger to emphasise each point): (1) 
drastically cut a company's energy needs, (2) lower raw material costs, (3) reduce climate-change 
problems, (4) employ more people and, (5) lower production costs up to 70% or more, and yet 
most of the world's businesses don't take part in any of them?' 

This wry observation helps explain why pressure is mounting to increase recycling legislation. 
Economists claim that if the possibilities of cutting costs and increasing profits exist with 
recycling, companies operating in a free market will eventually find these savings whether or not 
government intervenes. Yet for countries stricken with rising unemployment and rising waste 
and pollution levels, the question increasingly being asked is 'when will businesses take note?' 

Is Everything Recyclable? 

Unfortunately, no. Substances used in the medical and livestock industries, for example, can 
be unsuitable (some scientists believe that the mad cow disease outbreaks in the UK began 
when infected sheep carcasses were ground up and recycled as cattle feed). Clearly, there is no 
substitute for research, common sense, and basic safety that errs on the side of caution when it 
comes to recycling. 

For More Information 

For additional facts about recycling and its financial benefits, the book, WASTEnomics: 
Turning Waste Liabilities into Assets by Ken Tang and Jacob Yeoh is highly recommended. 
Contacting a local waste disposal company or public works department for the names of nearby 
recycling centers is also recommended. In addition, visit: www.euwid.de (click on the 
appropriate language translation icon). 'Euwid' is a German-based organisation that publishes 
newsletters and trade journals in German, English, and French. Many waste specialists keep 
abreast of the latest recycling developments using information posted on this site. 

Alternatively, visit the Recycled Products Purchasing Cooperative website at: www. 
recycledproducts.org or try: www.nfib.com/object/IO_28768.html (an American 
recycling site for small businesses). In the UK, visit: www.defra.gov.uk/environmental/ 
waste/business/regulation/index. htm. 



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Reuse, Remanufacturing, and Recycling: An Overview 

FIGURE 20-1 illustrates the costs and time involved in reuse, recycling, and remanufacturing 
The further away from the original product the reclamation process lies, the more the 
investment in raw materials and other inputs is lost and the greater the costs are to the 
manufacturer (who has to purchase replacements). Similarly, the wider the base of each 
closed-loop practice, the more time, effort and expense is involved in collecting and reprocessing 
reclaimed material: 



Figure 20-1 

Amount of time and effort needed to reprocess salvaged material 

(+) I 



I 














.... .. 












Kecy cling 










Remanufacturing 
















-► Reuse 


r < 


r ' 


r 




► 



Amount of time and effort needed to reprocess salvaged material 



(+) 



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PRODUCTION 



.The mechanical, biological or chemical processes used to 



deliver them to where they need to be. Offices, factories, farms, 
and restaurants all rely upon equipment and machinery in one 
form or another to turn information and resources into goods and 
services and since many of these tools (and processes) can waste as 
much or more than they produce, they present a prime target for 
efficient, sustainable practices. 



120 



21. Sustainable Production Locations 



The term 'industrial ecology' was coined in 1989 by Robert Frosch and Nicolas Gallopoulus to 
describe the growing practice of bringing manufacturing and service facilities together in a 
symbiotic manner. In layman's terms, this involves arranging businesses in a way so that their 
wastewater, emissions, wastes and other outputs can be used as raw materials by other 
businesses. In a process called 'energy cascading', excess energy from one company (usually in 
the form of residual heat or steam) can also be used to provide heating, cooling, or system 
pressure for another. The advantages include a reduction in raw material costs, low waste 
disposal expenses and reduced energy requirements. Additional benefits associated with 
eco-industrial setups involve a reduction in pollutants, a decrease in company regulatory 
burdens, and lower demands on municipal infrastructures. Nearby cities and towns benefit too, 
thanks to enhanced business and job development, increased tax revenues, and reduced 
environmental concerns and health costs. The city of Londonderry, New Hampshire, for 
example, became interested in eco-industrial parks after spending ten years and $13 million of 
taxpayer money cleaning up three toxic waste sites. 

Building a Closed-Loop Eco-industrial Park 

Most eco-industrial park projects start by estimating the material, water, and energy needs of 
interested businesses. A network flow strategy is then devised to examine synergistic links 
between existing or interested companies (see FIGURE 21-1). Afterwards, active recruiting 
takes place to entice businesses whose production processes will help fill any gaps. According to 
industrial ecology planners, the most common characteristics of a successful eco-industrial 
park include: 

1. Establishing material, water, and energy flows that can be used as raw materials to build 
sustainable or semi-sustainable closed-loop systems (material flows can include heat, 
steam, fly ash, sulphur, sludge, gypsum, steam, paper and plastic packaging, metal scrap, 
wood pallets, machine oil, and so on). 

2. Placing companies in close proximity to minimise transportation and material 
transfer costs. 

3. Establishing strong informal ties between plant managers and promoting free exchanges 
of information (which helps participating companies work toward a more collaborative 
work environment). 

4. Helping with the minor retrofitting of existing infrastructure (carrying out modifications 
to the involved companies so their outputs can be more easily shared). 

5. Maintaining 'anchor tenants' (usually in the form of a wastewater treatment facility or an 
energy producer) whose continued presence and outputs make industrial 

symbiosis practical. 1 



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Figure 21-1 

Waste Exchange at the Kalundborg Eco-Industial Park, Denamrk 

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121 



(sulphuric acid production) 



Statoil Refinen- 



ft A 



LakeTisso 



STEAM WASTE GAS 

WATER 



t t 



Asnaes Power Station 



" GYPSUM — 
CONDENSATE 



WASTE 
HEAT 



WATER 

(USED& 
UNTREATED) 



Greenhouse 



District Heating 

(City of Kalundborg) 



Gyproc 



Aalborg Portland 
A/S Road paving 



Asnaes Fish Farms 



Novo Nordisk 

(Pharmaceuticals) 



FISH WASTE 

i 

Fertiliser 



How Successful are Eco-industrial Parks? 

A study of eco-industrial parks in Denmark (Kalundborg), Texas (Brownsville and Pasadena), 
New Hampshire (Londonderry), and Mexico (Matamaros), revealed that the annual economic 
benefit enjoyed by participating companies in an industrial ecology arrangement is as high as $8 
million, with an annual return on investment reaching 59%. In addition, reductions in millions 
of pounds worth of materials, waste, and emissions were also identified as well as significant 
decreases in the need for natural resources such as water. 1 The longevity of the Harjavalta 
industrial area in Finland, however, best demonstrates the amount of success an eco-industrial 
park can enjoy. After World War II, Finland suffered from severe energy shortages that forced 
Finish copper company Outokumpu to resort to 'autogenous smelting' (or 'flash' smelting) in 
which the heat produced by oxidising metal is used to maintain smelting processes. 
Outokumpu's flash smelter, which was the world's first, started operations in Harjavalta in 
1949. Over the years, the Harjavalta site has expanded to include over a dozen major firms that 
rely on each other to compliment various production processes. Sulphur, sulphuric acid, slag, 
heavy metals and wastewater are just a few of the waste outputs used as resources. Today, 
almost 60 years after it began, the Harjavalta site employs over 1,000 people and incorporates 
the services of more than 100 subcontractors on a regular basis. 3 Eco-industrial parks, it seems, 
have staying power. 



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22. Clean Production 



Banskia Food Products Pty Ltd is a multi-million dollar company in the Sydney, Australia 
suburb of Moorebank. Its 30 employees process and package apples for the baking and catering 
industry. Not long ago, at the beginning of each production cycle, the company used a 
substantial amount of fresh water for washing the company's main raw material (apples). 
Afterward, the floors of the production areas became littered with apple cores and peelings that 
were then washed into drains using the excess juice derived from apple parts blanched in heated 
tanks. Recognising that a sizeable amount of money was literally being washed away due to 
wastage and other inefficiencies, the company asked an independent environmental 
management team to come in and investigate its efficiency options. As Banskia saw it, it was 
time to transform waste into profits. 

A thorough investigation revealed that a significant portion of the company's raw materials 
was indeed being wasted at every stage of operation due to a poorly designed plant layout, the 
inability of certain production stages to cope with the smooth flow of production, and 
inefficient conveyors and dicing machines. In addition, far too much juice, rich in sugar and fine 
apple particles, was being flushed away. Steps were subsequently taken to collect and 
concentrate the excess juice, together with waste peelings and cores, for use as a sugar 
supplement in sauces and jams. Annual returns from this practice alone amounted to between 
$6,000 and $10,000. Next, a new conveyer and a more efficient dicer were obtained that 
reduced product loss (and cleaning requirements) and helped to generate a three-percent 
increase in product yield. Further measures the company adopted included collecting and 
bailing cardboard and other waste packaging for recycling (a practice that eliminated between 
$3,000 to $4,000 in rubbish disposal costs) and the conversion of recovered apple peels into 
powder for use in baking, confectionery, and as a pectin replacement (this project was the result 
of a waste stream analysis done in conjunction with the University of Western Sydney). Banskia 
has since used the knowledge and impetus gained from its efficiency successes to further clean 
up its production processes by identifying additional profit-making and cost-cutting practices 
including: lagging steam pipes to save energy, seeking better electricity and gas rates, and 
utilising cleaner, more efficient, labelling and purchasing processes. 1 

Clean Production Defined 

'Clean Production' or 'Cleaner Production' is often defined as an integrated preventive 
strategy used in the production of products and services to increase efficiency and reduce risks 
to humans and the environment. According to the United Nations Environmental Protection 
division, clean production is neither a legal nor a scientific definition to be dissected, analysed or 
subjected to theoretical disputes. Rather, it is a broad term that encompasses what many 
different people, countries, and organisations refer to as 'eco-efficiency', 'waste minimisation', 
'pollution prevention', or 'green productivity'. 2 

In many countries, at organisations both large and small, clean production methods 
encouraged by national environmental agencies, regional conservation groups, and university 
departments are reducing business operating costs, improving profitability, increasing worker 
safety, and reducing negative environmental impacts. Far from being expensive, most 
companies are surprised at the cost reductions achievable through the adoption of clean 
production techniques and the minimal capital expenditure required to obtain worthwhile gains. 

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Fast capital payback periods are also common. Furthermore, by utilising clean production 
methods, waste handling charges are being cut, raw material use is being lowered, and business 
insurance premiums are being slashed. 3 For example, the Cleaner Production Challenge (CPC) 
conservation programme, a voluntary resource programme that helps the metal finishing and 
printed circuit board manufacturing industries in the American state of Washington, has helped 
40 businesses reduce wastewater by 67% and sludge by 40%. In the process, CPC has helped its 
clients gain more control over their production, produce less waste and greatly improve 
compliance with local environmental laws. A key to the success of the programme has been the 
willingness of industry leaders to share their techniques with other agencies and companies. 4 
Good news, it seems, is contagious. 

Putting Together a Clean Production Line 

For the most part, cleaner production starts with lean production systems. Chaku-Chaku 
(Japanese for Load-Load), for example, is a single-piece production system designed to eliminate 
waste, improve product quality, reduce production setup times, lower inventory costs, and 
reduce floor space requirements. Central to its success is the creation of a dedicated production 
line consisting of dedicated machines or tools that perform only one or two steps in the 
sequence of making a part or product. As Peter Zelinski, editor of Modern Machine Shop 
Magazine points out, usually there are two ways to produce a machine part or product. The first 
is to purchase an expensive machine tool capable of multiple functions. The second is to 
identify every step involved in transforming a raw material into a finished component and to 
create a separate, simplified machine or workstation for each transformational step. The steps 
must then be arranged in a close-knit series of workstations so operators can move unfinished 
parts or products from one station to another as they're being produced. 

Although the first method sounds faster (and less complicated) than the second, it is not 
always the case. Big, multi-function machines can cost much more when compared to a series 
of smaller machines that perform the same function. In addition, big machines all-too-often 
waste the time of workers because they usually have to be programmemed and calibrated for 
each function they perform. Production bottlenecks are also a concern with large multi- 
functional machines, especially if the numerous operations they perform have to be scheduled 
or performed in a single cycle (most multi-functional machines can only perform one function 
at a time). Moreover, an entire production operation can grind to a halt when a large, multi- 
functional machine tool is shut down for repairs (in addition, maintenance costs for large 
machines are also higher than those of smaller machines). These factors are what the Boeing 
Corporation took into consideration when it replaced several giant, multi-function machine 
tools at a number of its production sites with a series of smaller, simplified machines that 
performed the same functions of big machines for a fraction of the cost. For example, a 
contoured composite part used on 777 aircraft was previously machined on a $1 million grinder 
capable of performing five different functions (four of which could not be used when the 
machine was in operation). Boeing replaced this machine tool with a one-function grinder 
specifically designed to do only what was required. The cost of the smaller machine? $50,000. 
Elsewhere, Boeing engineers discovered that one of its landing gear support assemblies involved 
a 1.6 kilometre long production process. Determined to eliminate this waste, the engineers 

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consolidated assembly operations into a series of close-knit procedures, thereby reducing the 
part's travel distance by 80%. In the process, a large machine costing more than $1 million was 
replaced with a $15,000 alternative and a large 'oven' used for curing was replaced with a smaller 
one that matched the part's size and shape and cost one-percent that of the larger oven's price 
tag (the smaller oven also uses less than one-percent of the electricity of the larger oven). 
Further production achievements from the improved setup at Boeing included reducing the 
various stages required to manufacture metal parts from five days to 25 minutes. 

Before Chaku-Chaku, employees used to have to travel to separate locations all around the 
production shop to drill and grind components to a desirable shape. Now Boeing's production 
procedures are performed on smaller, more numerous, but dedicated machines placed in close 
proximity - thereby saving much time and money 5 

Putting Chaku-Chaku into Practice 

The first rule in setting up a lean and efficient production line is 'don't overbuy'. Overbuying 
includes: (1) purchasing equipment that will only be used once or twice, (2) buying machinery that 
produces or performs far more than what is needed, and, (3) taking on board anything that 
requires more investment in time, input, and money (i.e.: energy) than what is obtained in return. 
To help avoid these pitfalls, the following questions 6 should be asked before purchasing any piece 
of machinery or equipment: 

- Is this machine or item really necessary? Big is not always better. Big machines can cost a lot 
more in terms of time, money and energy - and result in extra capacity that will never be 
needed. Before buying large machinery, find out if smaller, more efficient machinery is more 
economically feasible. 

- Is the full life-cycle cost of the machine being considered rather than its purchase price? 
Buying a cheaper piece of equipment is not always the bargain it seems. Inefficient, 
energy-hungry machines can consume their initial purchasing cost in energy per week. 
When buying equipment or machinery, remember that there are always two price tags. The 
first reveals the machine's purchase cost. The second includes how much the machine costs 
to operate in the long-term. 

- Make certain that it is possible to accurately measure - in real time - what the machine 
produces and consumes in terms of materials and energy. Deficient (or zero) measurement 
makes it difficult, if not impossible, to determine how much a machine costs. Additionally, 
too many production systems contain monitoring procedures that measure what occurs 
after the manufacturing process has been completed. This means that a mistake or 
malfunction can repeat itself countless times before someone realises what has happened. 
Real-time monitoring avoids this scenario because it provides instant feedback. Yes, 
real-time monitoring usually requires an initial investment in equipment - as well as the 
subsequent training of employees - but the results are worth it. For example, in 1897, 
efficiency advocate Sakichi Toyoda innovated his company's power-driven weaving looms 
with real-time-monitoring measures that automatically shut the machines off when a thread 
broke, thereby preventing the wasting of good thread and the making of defective cloth. The 
money this idea saved was substantial enough to create the Tomen Corporation (a large 
Japanese general trading company) and the Toyota Motor Corporation. 

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Additional Suggestions for Reducing Production Waste 

- Establish and support an in-house employee training and sharing programme. The more 
people that are involved in a waste-reduction programme, the more cost savings will be 
enjoyed. More often than not, employees hold the answers to most waste reduction and 
efficiency questions. Coax these answers out of them with motivational management and 
teamwork techniques. 

- Seek outside help when needed. If answers from inside the business aren't forthcoming, 
seek assistance from a local environmental agency, a dedicated government programme, 
or an interested university. Many times the services these institutions offer are either free 
or minimally priced. The School of Chemical Engineering at the South China University of 
Technology in Guangzhou, China, for example, developed a cleaner production process for 
producing sodium chlorite by reducing sodium chlorate with hydrogen peroxide. The 
result? Waste acids were dramatically reduced and the byproduct (sodium sulfate) can 
now be minimised and reclaimed. 7 This discovery has saved several companies in the 
chemical industry the time and expense of figuring it out on their own. (Note: many 
government agencies will gladly provide funding for production improvements if the 
improvements reduce water or energy needs and/or minimise waste.) 

- Replace toxic or hazardous substances with nontoxic raw materials. Using safe and 
sustainable raw materials reduces raw materials costs, lowers the training expenses and 
danger of handling toxic substances, and reduces waste disposal costs while avoiding 
resource depletion and environment destruction. For example, in the USA, a 3M plant 
saved $120,000 in capital investment - and $15,000 annually - by replacing the toxic 
solvents it used with water-based alternatives. 

- Reduce the energy requirements of machines and equipment. Clean production requires 
that every piece of equipment and machinery be inherently efficient before production 
starts. Whether production requires a photocopier, a million-dollar machine tool, a coffee 
maker, or a vast configuration of motors and pumps, everything should run on as little 
energy as possible. Before buying any piece of equipment or machinery read the label to 
determine the amount of power it consumes and compare its efficiency rating with 
other models. 

- Keep equipment and machinery running at optimal levels. Good maintenance not only 
involves operating most equipment and machinery at peak levels (anything less and the 
full potential of the machine is being wasted), it also requires keeping these items in 
optimal condition with scheduled inspections and maintenance. Regular, scheduled 
machine maintenance may not be glamorous or exciting, yet it saves money in four ways: 
(1) it prevents possible breakdowns, (2) it reduces additional costs resulting from broken 
equipment, (3) it extends the life of the machine and, (4) it lowers energy costs (well- 
maintained machines almost always use less power). To ensure that equipment and 
machinery is operating at optimal levels: 

- conduct (and record) frequent inspections, 

- ensure that all moving machine parts are properly lubricated, 

- clean equipment and machinery on a regular basis, 

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- replace worn or damaged parts as soon as they are discovered, 

- ensure that drive belts, couplings, chains, and bearings are adjusted and in 
good condition, 

- keep equipment or machinery well ventilated, and, 

- replace old and/or outdated equipment with more efficient models. 

- Mix only the volume of materials needed to fill an order. This guideline is a classic 
building block of Lean Thinking. Knowing how much of a product is needed before it is 
produced can greatly reduce raw material costs, energy expenses, and the costs of labour 
and storage. A good example of this is seen in the publishing industry with 'print-on- 
demand' technology. The number of books a publisher prints is often based on 
guesswork, which can result in piles of unsold books that have to be collected and pulped. 
Today, specialised printing machines can print the electronically stored text of almost any 
book in less than a minute (like this one), which means that only the number of books 
ordered is printed - and that publishers can keep titles 'in print' indefinitely at little or 
no cost. 

- Collect all recoverable materials and outputs for re-use. This includes steam and water as 
well as oil, solvents, chemicals, cleaning liquids, and material scraps. If you cannot find 
another business that needs these materials, figure out how your organisation can use 
them at a profit. 3M's Traffic Safety Systems Division, for example, used its scraps and 
outputs to devise a new reflective product for signs that uses less energy, reduces process 
and design waste by 65%, and emits fewer toxins during production. As 3M sees it, 
anything not built into a product is waste - and therefore a cost - and is thus a sign of poor 
quality. In another example, a small modification to the production process of a Polish 
metalworking plant allowed scrap metal to be incorporated straight back into the system, 
which led to a 30% reduction of raw materials and annual cost savings amounting to 
$70,500. In Germany, a paper manufacturer virtually eliminated its massive water needs 
by filtering its base supply and re-using it in a closed-loop system. Across the Atlantic, an 
American jewellery-making business saved nearly $300,000 in capital costs and more than 
$115,000 in operating costs per year by introducing a closed-loop system that recycles and 
reuses its jewellery-plating outputs. 

- Recover waste heat from kilns, ovens, and other high temperature machines. Waste heat 
from furnaces and boilers, exhaust, compressors, and hot-liquid blow-downs can be 
collected and used in other processes. In the USA, for example, most power stations 
convert only 34% of their fuel into electricity. The remainder, 66%, escapes as waste heat. 
Denmark, on the other hand, converts 61% of its electrical-plant fuel into power by, in 
part, recapturing heat through efficient furnace design. 

- Insulate boilers and furnaces with ceramic fibres or other super-efficient materials. Even 
with efficient flue technology, more than 23% of the heat a furnace generates can go up its 
smokestack while up to 40% can dissipate through the furnace's walls. To minimise heat 
loss, focus on where it occurs most. As one factory worker told me, 'If you can't place your 
hand on the exterior wall of a furnace because it's too hot, you're burning money' 

- Explore and discuss alternative practices to reduce energy requirements. A Kraft Foods 
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plant in Campbell, New York, for example, reduced its natural gas needs by over 13% per 
year by improving boiler efficiency reducing steam demand via the installation of 
direct-contact water heaters, and using lower grade fuel oil for backup purposes to obtain 
more favourable utility rates. 8 

Clean Production and Water Reduction 

Water often carries two costs. First, the water itself has to be paid for. Second, discarded 
water accrues expenses because most municipalities compute their sewage fees as a percentage 
of metered water use. Examples of water-saving practices used in clean industrial production 
systems include: 

- Install closed-loop compressor cooling systems. Using fresh municipal water (tap water) 
once, then flushing it away, is both costly and a waste of good water. Close your 
company's wastewater loop by reusing what was previously discarded (filter what has been 
used and re-route it back into the production system). For example, Simon Fraser 
University in Burnaby, British Columbia, installed a closed system to reduce domestic 
water use and saw its water bills fall by $35,000 in one year. 9 

- Consider waterless alternatives in production lines. In Australia, the owners of Spectrum 
Printing invested in a waterless printing process rarely used by other printers. Apart from 
saving water, the process also saves 40% of waste paper and eliminates the need for 
isopropyl alcohol, which halts the discharge of volatile organic compounds as well as the 
costs associated with their disposal. 11 

- Consider using gray water (or rainwater) in production processes. If high-grade tap water 
is not needed for production purposes (and in many processes it is not) consider 
substituting it with collected rainwater or water gathered from other sources. Vam 
Organic Chemicals Ltd. in Gajraula, India, for example, uses spent water for dust control 
and incorporates effluent into its distilling operation. Combined with a system that 
recycles sealed water in a vacuum pump, the net savings amounted to $33,330 per year in 
fresh water costs. 

- Invest in water-saving practices and technologies. The Godfrey Hirst carpet 
manufacturing plant in Geelong, Australia has been saving the equivalent of 38 Olympic- 
sized swimming pools of water annually after it modified its production system to include 
in-line drying practices, which eliminated an entire washing and vacuuming stage. In 
addition, the company upgraded a fluoro-chemical application process and invested in the 
production of solution-dyed nylon products that do not require dyeing or drying. 
Meanwhile, two textile dyeing companies in Korea (Colorland and WS Dyetech Ltd) 
substituted water-intensive alkaline fabric scouring with more efficient enzymatic 
scouring and saved eight to ten tons of water per ton of fabric production (while 
eliminating the need for caustic soda). If 200 other dyeing companies across Korea 
adopted the same practice, it's been estimated that the industry's total annual water use 
rate would fall by 3,200,000 tons - a cost savings of $2,133,333. 12 



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It Doesn't Add Up, It Multiplies 

Controlling production waste is all-too-often an after-the-fact endeavor that asks 'How can 
we deal with our waste?' Instead, the question should be 'What alternatives are there?' Seen in 
this light, cleaner, more efficient production does not create obstacles to production and growth. 
On the contrary, sustainable, closed-loop production practices reduce costs, conserve raw 
materials, help eliminate toxins and hazardous materials (and their expense), and reduce 
negative impacts on the environment. For more information about cleaner production, visit 
www.cleanproduction.org. 



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23. Motors and Pumps 



Motors are ubiquitous. Virtually every business contains at least one. Some have thousands. 
Motors are used to drive almost everything from pumps, conveyers, refrigeration equipment, air 
compressors, and fans to a host of other operations too numerous to mention. In the process, 
they can consume up to 60% (or more) of a company's fuel costs, which translates to around 
40% of the world's electricity or roughly 75% of all industrial electricity. In fact, motors use up 
so much electricity that the amount they consume over their lifetime always costs more than 
the price of the motors themselves (some motors actually consume, in electricity costs, the 
amount of their purchase price every week). 1 A new electric motor purchased for $1,500, for 
example, can cost as much as $13,000 a year to run and a typical 100 horsepower AC induction 
motor purchased for $5,000 will use as much as $35,000 worth of electricity in a year. Compare 
these figures to an older model 100 horsepower motor running continuously at full load (as 
many motors are designed to do), which can cost $70,000 a year to operate - or an older 20 
horsepower motor, which can consume up to $14,000 worth of electricity annually. 

Even with electricity rates as low as four-cents per Kilowatt-hour, most 20 horsepower 
motors (running continuously) use up to $6,000 worth of electricity annually. That's about six 
times the purchase price of the motor. Diesel or gasoline motors can be even more costly. Even 
if diesel prices were to fall to $0.85 for 3.78 liters, a 75-horsepower motor would still cost 
$6,400 a year to operate. 

Determining the True Costs of a Motor 

A general assumption held by engineers and mechanics in many industries is that efficient 
motors are more expensive than their inefficient counterparts because heavier copper wire, 
thinner core laminations, higher-grade steel, and higher-grade bearings cost more. In the 
long-run, however, motors designed to be more efficient always end up costing less. Equally as 
important is that contrary to what many people believe, most motors do not become more 
efficient when they are given less of a load to perform. Most motors need to run at or near 
their designed power rating (usually 75% to 100% of their full load rating) in order for them to 
operate at optimal efficiency. 

No matter how it's looked at, the overall financial impact a motor will have on a business's 
revenues should be considered long before a purchase is made. To calculate the amount of 
money a motor will consume (in electricity) over its lifetime, it is first necessary to find out the 
local cost of electricity per Kilowatt-hour. The efficiency rating and amount of time the motor 
will be in operation are also needed. For example, the normal lifespan of a typical 100 
horsepower motor is around 40,000 hours or about five years of continuous operation 
(although a well-maintained motor can last much longer). Let's assume that electricity costs are 
$0.05 per Kilowatt-hour, the motor in question will run 24 hours a day, seven days a week at full 
load, and that it's rated as 94% efficient. The formula for determining the amount of electricity 
that the motor will consume over five years of operation is: 

(100 horsepower x .746 kW/hp x 40,000 hours x $.05 kW-hour) / .94 efficiency = 
$158,723 electricity costs 

Another way to compare the amount of money a motor can cost to operate is to take the 
difference in efficiency points (expressed as a percentage) from the efficiency rating of two 
similar horsepower motors and to multiply the difference by the amount of horsepower. If 

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electricity costs $0.05 per Kilowatt-hour, multiply the first sum by $50 to obtain the overall 
electricity costs of the motor in question. 

For example, the difference between a 96% efficient 100 horsepower motor and a 92% 
efficient 100 horsepower motor is four percentage points. Four times 100 horsepower is 400. 
Assuming that electricity cost five-cents per Kilowatt-hour, multiply 400 by $50. The total 
($20,000) shows how much extra will have to be paid in electricity over the life of the motor 
(assuming the motor is in continuous operation). 

Reducing the Costs of Operating Electric Motors 

The golden rule in reducing the cost of running a motor is to ensure that it's the right-size 
motor for the job. Many businesses run motors that are too big for the task under the 
assumption that the additional horsepower may be needed in the future. More often than not, 
this is expensive, costly, and unnecessary. Over-size (and therefore under-loaded) motors waste 
energy and cost more to run. In many cases running two smaller energy-efficient motors can 
actually cost less than operating one over-size motor. 

Reducing the Cost of Pumps and Pumping 

Up to 20% of the world's motors are used for pumping purposes and most of what they 
pump is water. Water and wastewater pumps consume over 50 billion Kilowatt-hours of 
electricity in the USA every year (about $4 billion worth of power) - and most of the energy 
they consume is used to fight against the friction created when water is forced through narrow 
pipes, around bends, and up steep inclines. 

Just as with motors, most pumps are bigger and more powerful than they need to be because 
in many cases production designers did not know what the exact pumping requirements were 
when the pumping system was being planned. The result is that valves and other devices are 
later installed to create intentional friction to reduce output to manageable levels. Obviously, 
this is not an efficient practice - particularly when the annual expense of running an over-size 
pump can cost several times more than the price of the pump itself. In some cases, over-size 
pumps can be balanced by trimming the impeller or replacing it with one of a smaller diameter 
(an impeller, which is similar to a propeller, transfers energy from a motor to the fluid being 
pumped inside a tube or pipe by directing, increasing, and pressurising the flow of liquid inside). 
For a pump operating at less than ten-percent of its designated flow rate, trimming an impeller 
can reduce electrical consumption by as much as 25%. 

Improving Pump Efficiency 

Thinking ahead is probably the best way to avoid the costs associated with buying an 
over-size pump. Try to envision the entire pumping system beforehand with an eye toward 
maximising efficiency — then seek a pump that is compatible with its operation while thinking 
about how the entire system can be made more efficient. The authors of the book Natural 
Capital 1 (indeed, Amory Lovins is widely seen as the main pioneer in exposing motors as major 
energy wasters) describe how several years ago the Interface carpet company in Shanghai built a 
factory where the production process required 14 pumps totaling 95-horsepower. By 
redesigning the layout of the entire system, however, the main engineer, a man named Jan 
Schilham, was able to cut costs, improve efficiency, and reduce the overall pumping power 

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needed by 92%. Schilham's design incorporated two simple changes from which almost any 
pumping system can benefit. First, fatter pipes were used. By using fatter pipes less friction is 
created when fluid moves through them. By increasing the diameter of a pipe by 50%, friction 
can be reduced by 86%. The result is that less pumping energy is needed, which means that 
smaller, more economical pumps can be used. Traditionally, engineering students are taught 
that the extra cost of fatter pipes does not justify the cost of the pumping energy saved. 
Unfortunately, this argument does not take into account the savings that are made from the 
lower cost of a smaller pump, the lower costs of operating a smaller motor, and the reduced costs 
involved with fewer motor controls and fewer electrical components. 

Schilham's second money-saving idea was to lay out the pipes first and install the pumps 
afterward - which is exactly the reverse of how most people construct a pumping system. Most 
engineers install pumps and motors in a convenient or arbitrary spot and then attach pipes to 
them. The pipes then have to be bent, turned, raised and twisted so their contents can be 
directed from one point to another. Unfortunately, each bend and turn, as well as the number of 
valves added, increases friction, which requires a larger pump and increases the amount of pipe 
needed. Conversely, the straighter the pipe, the fewer pipes are needed and the less friction is 
created. When fewer pipes are needed less insulating material is required to cover them, which 
also lowers costs. Furthermore, by using plastic or epoxy-coated steel pipes, friction can be 
reduced by another 40%, resulting in a proportionate savings in pumping expenses that can 
eliminate up to 95% of the costs of pumping. 

Additional Cost and Energy Saving Suggestions for Pumps 

Pumps don't just push fluids, they can also direct pressurised air from one spot to another. 
Whatever substance is being pumped, the following suggestions can reduce the costs involved: 

- Eliminate leaks in compressed air lines and valves. Up to 20% of the work output of a 
compressor is sometimes needed to make up for losses from air leaks. A General Motors 
assembly plant in Flint, Michigan, for example, reduced its energy needs by around 
eight-percent after, in part, decommissioning unused air supply systems and ensuring that 
those that remained worked properly 2 

- Eliminate leaks in steam pipes and fittings. A leak in a steam line can result in higher 
steam production requirements to compensate for what is lost. In addition, leaking 
condensate return lines bring back less condensate to their boiler, thereby forcing the 
boiler to use more energy to heat-up replacement water. In 2006, an Eastman Kodak 
manufacturing plant in Rochester, New York reduced its annual natural gas needs by 11% 
after improving and modifying its feed-water heat recovery system - a move that was 
accomplished at virtually no cost. 2 

- Insulate pipes and heating equipment to reduce heat loss. All pipes that transfer heated 
fluids or gases from one process to another should be well insulated. 

- Consider using Industrial Heat Pumps (IHP's). IHP's use heat from heat-producing 
processes to supplement other industrial heating processes or in preheating procedures. 



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For more information about getting the most from pumps and pumping, visit www. 
plantservices.com. 

Alternatively, browse the pump section of the Industrial Efficiency Alliance website at: www. 
industrialefficiencyalliance .org 



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24. Reducing Waste at Work: Getting Started 

Whether you represent a business that desires to become sustainable, or you work in a 
business school and want to add sustainability to your curriculum, you will need to practice what 
you preach before trying to convince others. To get started, gather your employees together, 
explain what needs to be done (and why) and begin with what is commonly called 'the low- 
hanging fruit' (the easiest tasks). Displaying a process map that illustrates the inputs and 
outputs that flow around and through the organisation is a good idea. Along with the map, the 
amount of electricity every workstation or department consumes should be mentioned (perhaps 
with facts and figures relaying their C02 emissions), as well as the amount and cost of materials 
the business swallows up (office supplies, raw materials, water...), how much waste (garbage) is 
created, and the types of waste being generated. This is necessary to ensure that the 
organisation is seen as serious in its attempts and to highlight the fact that the efforts 
employees make (or do not make) will be monitored. 

Some businesses start their sustainability programmes by suggesting that staff transport 
themselves to work more efficiently. This may not alter the company's bottom line (and 
managers may be told that it's none of their business), but employee transportation is as good a 
place as any to begin making changes. Encouraging employees to use public transportation can 
significantly reduce the ecological rucksack and carbon footprint of a business. Additional 
waste-reduction suggestions include: 

- Encourage employees to walk or bike to work (to encourage the latter, ensure that 
employees have a safe place to put their bicycles). 

- Begin a car-pooling programme. Find out who lives on whose route to work and 
promote cooperation. 

- Initiate a company vehicle inspection programmeme. Ensure that all company vehicles are 
both efficient and well maintained. Encourage employees to be equally as vigilant and 
diligent with their vehicles. 

- Determine if or how employees can work from home or, work out an alternative schedule 
that allows employees to stagger their schedules so they can work at home part-time. 

- Encourage conference calls and/or videoconferencing instead of travelling to meetings. 

- Share office space and equipment rather than purchasing separate items for 
every employee. 

Making the Most of Office Furnishings, Computers, and Equipment 

- Ensure all electrical equipment (even coffee makers) is energy efficient. An Energy Star 
rated medium- copying machine, for example, can cut $50 or more off annual 
energy bills. 

- Buy remanufactured, energy-efficient computers, copiers, fax machines, etc... instead of 
new models whenever possible. Remanufactured or refurbished equipment provides 
excellent value for money. 

- Use laptops in place of desktop computers. Laptops use less electricity. (Remember to 
unplug the power cord when the laptop is not in use.) 

- Turn equipment off when it's not needed. Computers, when left on overnight, can rack up 
$75 in energy costs per unit, per year. 

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- Unplug all electrical items when not in use. Most electrical equipment continues to draw 
power when it's turned off. Even an empty mobile phone charger draws electricity if it's 
plugged in. Especially ensure that equipment is unplugged during weekends (vending 
machines are a prime target). 

- Enable the power management features on desktop computers (and monitors) to switch 
off when not in use. This can save up to $55 per monitor and $45 per computer annually. 

- Use smaller computer monitors. A monitor that is 5cm smaller than a larger model can 
reduce electricity consumption by as much as 30%. 

- Don't use screen savers. Instead, switch the screen saver mode to 'blank screen' or 'none'. 

- Buy used or remanufactured office furniture. Few people will note the difference. 

- Invest in high quality equipment rather than cheap, shorter-life versions. 

General Energy Reduction 

- Insulate the building inside and out (paying particular attention to heat and cooling loss 
from doors, windows, and walls). Improved insulation can save hundreds of dollars or 
more a year in energy costs. 

- Determine if the local power company provides sustainable energy alternatives. Some 
electricity providers invest in wind, solar, or tidal energy and provide these options to 
their customers so they can cut C02 emissions. 

- Set the office thermostat a few degrees lower in the winter and a few degrees higher in the 
summer. A 2% decrease during the day can cut energy bills by 2.5%. 

- Don't heat or cool an unoccupied office (particularly during the evenings and weekends). 
Setting the thermostat back ten degrees at night can cut 15% off energy bills. 

- Perform periodic maintenance of HVAC equipment (Heating, Ventilation, and Air 
Conditioning). Good maintenance can reduce heating bills by 5% and cut electrical bills 
by 2%. 

- Replace all office light bulbs with energy efficient alternatives. This not only saves money, 
the resulting drop in electricity reduces greenhouse gas emissions. If all Europeans 
changed their standard light bulbs to energy efficient bulbs the resulting drop in carbon 
emissions would be equivalent to taking 70% of the continent's cars off the road. 

- Turn off all lights when not needed (installing motion detectors can eliminate this 
problem). Keeping off unnecessary lights not only saves the money needed to power light 
bulbs, it also lowers cooling costs - and can shave up to 18% off an office energy bill. 

- Turn off ventilation systems in unoccupied areas. This can lower HVAC costs by 
$300 annually. 

- Pay bills electronically. If everybody in the USA paid his or her bills online, the nation's 
annual paper waste would be reduced by 1.6 tons and greenhouse gas emissions would be 
cut by 2.1 million tons. 

Reduce Paper Consumption 

Roughly 3% of world industrial production is spent on the creation of paper. Paper 

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manufacturing also uses more water than any other industry (98 tons of water are needed to 
produce one ton of paper), releases the fourth most pollutants, and is considered the third most 
energy intensive industry on Earth. In addition, around 900 million trees are cut down annually 
to meet the world's paper demands. Yet only 10% of the world's paper is ever utilised in the long 
term. Most is used and thrown away shortly after it's bought (the average office worker uses one 
sheet of paper every twelve minutes). With this in mind, the city government of Seattle, 
Washington concluded that a 1% reduction in its $288,218 annual paper bill (which amounts to 
73,902,000 sheets of paper) will save thousands of dollars in paper costs; 62 trees; 244,553 liters 
of water; 136 kilograms of water pollutants; 3,208 kilograms of solid waste; 9,298 kilograms of 
greenhouse gases and other pollutants; and 123,662 BTU's of energy. That being said, saving 
trees and reducing pollutants isn't all that minimal paper usage achieves. 

The Brazilian business Semco streamlined its operations years ago by, in part, reducing 
company paperwork. Upset with the fact that employees rarely talked to one another, company 
CEO Ricardo Semler decreed that all interoffice memos could be no more than one page in 
length. Employees therefore had no choice but to actually talk with each other. As a result, 
more work got done. In Australia, a business turn-around specialist once told me that virtually 
his entire secret to saving bankrupt companies was to 'forbid the writing of memos altogether' 
(for the same reason). Oticon Inc, a hearing aid manufacturer in Denmark famously cut a hole 
in the roof of its multi-story headquarters straight through the ceiling of the employee cafeteria 
and into a main collection site. A Plexiglas tube was inserted into the void and all discarded 
paper was continuously taken up to the roof and thrown down the tube - a powerful message 
directed at employees, which proclaimed that paper waste would no longer be tolerated. Paper 
consumption in the company subsequently decreased by 50% and the business enjoyed a 
dramatic increase in productivity. 

Suggestions for Reducing Paper Use 

- Establish a company mandate that demands paper use is reduced (then enforce the rule). 

- Shorten the number of forms and papers customers must fill out (they'll love you for it). 

- Store your business data (including employee manuals, policies, etc..) in an 
electronic format. 

- Distribute memos via e-mail or display them on a single sheet of paper in a 
central location. 

- Use both sides of a sheet of paper and set photocopiers to do the same. This practice alone 
can cut 10% to 40% off paper costs. Seagate Technology Inc., a computer disk drive 
manufacturing company in Scoots Valley, California, reduced its annual paper needs by 
four million sheets this way, thereby cutting its paper bill by $45,300. 

- Set wider margins on documents so more words can be placed on each page. 

- Use smaller font sizes so more text can be put on a single page. 

- Use chlorine free, recycled paper for all paper needs. Recycled paper requires 60% less 
energy to make than virgin paper. Every ton of recycled paper also saves 4,000 kilowatt- 
hours of electricity, 26,497 liters of water, and 17 trees (each of which has the capacity to 
filter 27 kilos of pollutants from the air). 

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- When printing or photocopying, adhere to the following: (1) always print in 'draft' mode, 
(2) avoid color printing whenever possible, and, (3) buy recycled toner and ink. Each of 
these practices saves ink. 

- If recycled paper is unavailable, use paper made from sustainable sources such as 
ecologically treated bamboo or hemp. 

- Place a paper recycling receptacle in a conspicuous place, encourage its use, and schedule a 
designated employee or cleaning crew member to arrange regular collection. 

- Shred unwanted paper and use it as packing material. 

- Reuse paper, envelopes, and boxes whenever possible. The Washington Suburban 
Sanitary Commission decided to replace its billing envelopes with send-and-return 
envelopes that could be used for both billing and receiving payments. As a result, 47 cubic 
meters of warehouse space immediately became available and the cost of envelope 
purchases was reduced by $55,000. 

- Replace paper towel dispensers in washrooms with energy-efficient air hand-dryers. 

Water Reduction Measures 

With offices using up to 12% or more of a nation's daily potable water, much can be done to 
reduce consumption without making sacrifices. For example: 

- Install faucet aerators (low-flow devices) on all taps. 

- Replace toilets and urinals with low-water or water-free models. 

- Use filtered tap water rather than delivered bottled water - or use water straight from the 
tap. In many regions local tap water is better than bottled water in terms of cleanliness 
and quality. 

Miscellaneous Tips 

- Ask office cleaning crew staff to use non-toxic cleaning products. 

- Buy office supplies in bulk (which can save on packaging). 

- Encourage the planting of trees or other indigenous foliage outside the office building. 

Vehicle Use Cost- Saving Suggestions 

In 2004, the United Parcel Service (UPS) began a policy designed to reduce the number of left 
turns made by its drivers. Having its vehicles stop and idle at traffic lights while waiting to turn 
against oncoming traffic was literally costing UPS millions of dollars in fuel losses so a software 
programme was devised that mapped a customised route for each driver to minimise left turns. 
This practice not only saves the $3 million annually, it reduced 1,000 metric tons of C02 
emissions during the first few years of trials (Sayre, 2007). Such is what happens when positive 
changes in behaviour are made. 

To make your company's vehicles more efficient, first measure and record the amount of fuel 
they consume. Determine the efficiency rating of each vehicle, as well as how much pollution it 
produces per year. Visit the US . Department of Energy website and look up the year, make and 
model of the vehicle to obtain this information. Next, apply as many efficiency measures as 
possible (see below). Record how much was saved after one or two weeks then share the results 

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Production — © The Sustainable Business 2010 



with employees and encourage them to seek more ways to cut waste and costs. Some companies 
reward their most efficient drivers on a monthly basis, which instigates a healthy competition 
between employees. 'Just remember to keep encouraging everyone,' a shift supervisor told me, 
'good ideas acquired with ease are just as easily discarded with ease.' Following are common 
ways a business can save fuel: 

- Don't waste fuel idling. Large vehicles, like trucks and buses, consume huge amounts of 
fuel when idling - around 4 litres an hour. Have drivers use auxiliary power units during 
rest periods 

- Invest in hybrid vehicles. Hybrid cars and delivery vehicles are not only more fuel efficient, 
they are gentler on the environment. 

- Decrease the amount of time spent driving. Fill up trucks before sending them off (inform 
your customers how much money and C02 emissions they can save by having shipments 
delayed until delivery trucks are full). Combine errands or deliveries, car pool, take public 
transportation... do whatever is necessary to minimise driving time. 

- Don't send out a big truck when a small one will suffice. This practice cut 21 million miles 
from Xerox's distribution network. 

- Check tire pressures. Try pushing a car with flat tires and you'll discover why this is 
important. Keeping tires properly inflated can increase fuel efficiency by 3% or more. 
According to the Rubber Manufacturers Association, 85% of people do not check their tyre 
pressure properly. Wal-Mart increased the efficiency of its fleet by 6% with fuel- 
efficient tires. 

- Clean and maintain engines. Clean or change the air filter regularly (two or three times a 
year), change the oil as recommended by the manufacturer (usually once or twice a year), 
check all fluids, and clean and replace spark plugs regularly. 

- Plan journeys. Know every route in advance, which saves the time and expense of 
unnecessary travel or getting lost. 

- Don't spill fuel when filling vehicles. A drop spilled is a drop wasted - and every drop 
adds up. 

- Eliminate unnecessary weight. Don't carry around more items or equipment than 
is needed. 

- Load up trucks to avoid making additional trips or to eliminate the need for two vehicles. 
Sentinel Transportation (a joint venture between DuPont and ConocoPhillips) have 
reduced the number of trucks leaving one site 55% by increasing payloads by 50%. 

- Make vehicles more aerodynamic. Install wind skirts. Remove luggage carriers, roof racks, 
and trailers when not needed (the air resistance these items create dramatically decreases 
fuel efficiency). 

- Keep vehicle windows up. Open windows create drag and increase air resistance. Keep 
interior vents open instead. 

- Turn off unneeded electrics. Although some manufacturers dispute it, air-conditioning 
can consume up to 10% of a vehicle's fuel. 



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Observe the speed limit. The faster a vehicle is driven the more fuel is burned. Driving 
113 kilometres an hour as opposed to 97 kilometres per hour consumes around 20% more 
fuel. Con- Way Freight estimates that lowering speed limits by 3 miles per hour will save 
the company 3.2 million gallons of fuel or $15 million annually. 

Don't ride the brake and don't brake hard. Many drivers brake more often than necessary, 
particularly when switching lanes. Unfortunately, heavy braking decreases fuel efficiency 
by as much as 30%. 

Coast on hills. Taking your foot off the accelerator when descending a hill reduces energy 
consumption. 

For more information about minimising waste while maximising fuel, time, labour, and 
other valuable resources, please visit the EFMD website, click on 'Publications' and 
download the free book Managing the New Frontiers. Similarly, to learn more about 
sustainability in a macro context, don't forget to check out the book The Performance 
Economy by the man who is one of the primary founders of the field of sustainability, 
Walter R Stahel. 



A free downloadable e-version of this publication, designed for easy and 
affordable distribution to employees, students, government and community 
officials and anyone else who you feel will benefit from sustainable long-term 
thinking, is available at www.efmd.org/publications 



© EFMD www.efmd.org 



End Note 



This is Not Going Away' 

Once the easy targets have been hit it's time to lead rather than follow. Don't waste time 
'greening' the wrong things. There is no point in making an unneeded production process more 
efficient or recycling an unnecessary packaging component. Take stock of the situation around 
you, delve deeper into the 7-P's, get more internal and external customers involved in 
improvements, and go further. Drop the assumption that sustainability is a one-time-only 
endeavour; there is no finish line and it's not a good idea to wait for market shifts, changes in 
regulations, or a return to bad habits to drive your next move. Stay ahead of the game. View 
oncoming laws, disruptive changes, and other seismic shifts (many of which can be seen well in 
advance) as an opportunity rather than a threat. After the bailouts and bonuses that followed 
the 2008 economic collapse, local and national governments - not to mention the public - are 
not in the mood to put up with managerial and financial incompetence. Likewise, governments 
are on the prowl for new ways to fill empty coffers and customers around the globe are wising up 
to the hidden costs of short-term products and production processes. What this means is that 
the entire risk-benefit spectrum is changing for businesses. Free rides are over. Patience is 
wearing thin with nations and businesses that refuse to think in the long-term and continue to 
cling to wasteful habits. Domestic and imported products filled with toxins are increasingly 
being banned, system inefficiencies are being penalised, and cities are taking back tax breaks 
given to companies that promise jobs, but don't deliver. 1 The message coming out of all of this is 
that sustainability is here to stay. Long-term thinking just makes sense. At some point, either 
as a manager or employee, you will have to decide whether or not to take part and thus choose 
how painful or painless the future of your business will be. 



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References 



Introduction 

1. Fish, Stanley, 'Fathers, Sons and Motorcycles', International Herald Tribune (www.iht. 
com), June 14, 2009 

2. Persig, Robert, Zen and the Art of Motorcycle Maintenance, Vintage Press, London, 1999. 

3. Judson, Olivia, 'License to Wonder', The International Herald Tribune, Nov 3 2009 (www. 
iht.com) 

4. O'Grady, Jeremy, The Week, Dennis Publishing Ltd, London, December 5, 2009, pg 3. 

5. Patrizio, Andrew, 'Peer to Peer', The Author, Summer 2008, pp. 68-69. 

6. Bradshaw, Delia, 'Business Schools Get a Lesson in Listening to Their Clients', Financial 
Times (Business Section), May 14, 2007. 

7. Senge, Peter, The Fifth Discipline: The Art and Practice of the Organization, Random 
House Books, New York, 2006. — The quotes shown are taken from The Economist Guide 
to Management Ideas and Gurus by Tim Hindle, Profile Books Ltd, London, 2008. 

8. Stahel, Walter, The Performance Economy (2nd edition), Palgrave / Macmillan, London, 
NY, 2010. 

1: Fundamentals 

1. Kaufield, Rich & Malhotra, Abhishek & Higgins, Susan, Green is a Strategy', strategy + 
business (http://wwwstrategy-business.com/article/00013?gko=e5d36) — as reported in 
Jeff Immelt and the New GE Way: Innovation, Transformation and Winning in the 21st 
Century, by David Magee, McGraw-Hill, 2009. 

2. www.epa.gov 

3. Winston, Andrew, Green Recovery, Harvard Business Press, Boston (Mass), 2009. 

4. http://searchsystemschannel.tech target. com/generic/0, 295582, sid99_gcil245328, 00. 
html 

5. Scott, Jonathan T, Managing the New Frontiers, MES publishing, Panama City (Fla), 
2008. 

6. Hawken, Paul, Lovins, Amory, Lovins, Hunter, Natural Capitalism, Little, Brown & 
Company, Boston (Mass), 1999. 

7. Orzech, Dan, At Clean Plants, It's Waste Not', Wired (online) http://www.wired.com/ 
science/planetearth/news/2005/08/68448, August 10, 2005. 

8. Kanal, Vijay, 'The Eight Biggest Myths about Sustainability in Business', GreenBiz.com, 
http://www.greenbiz.com/blog/2009/ll/23/8-myths-about-sustainability-business, Nov 
23, 2009. 

9. http://www.youtube.com/watch?v=iP9QF_lBOyA 

10. http://www.tennantco.com/ 

11. http://www.patagonia.com/web/us/home/index.jsp?OPTION=HOME_ 
PAG E&assetid= 1704 

12. http://www.epa.gov/iaq/pubs/sbs.html 



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References — © The Sustainable Business 2010 



13. Zandonella, Catherine, 'Airborne Toxins', National Geographic (The Green Guide 109'), 
www.thegreenguide.com/doc/109/toxin, July/ Aug 2007. 

14. Kamrin, Michael, Traces of Environmental Chemicals in the Human Body, prepared for 
The American Council on Science and Health, May 2003. 

15. EPA pamphlet (EPA-842-B-06-003: Volunteer Estuary Monitoring: A Methods Manual 
(2nd edition), Chapter 12, March 2006. 

16. John Hopkins University, 'Prescription Drug Pollution May Harm Humans and Aquatic 
Life', Science Daily (www.sciencedaily.com), April 11, 2002. 

17. Associated Press, 'Probe: Pharmaceuticals in Drinking Water', www.cbsnews.com, March 
10, 2008. 

18. Hart, Stuart, Capitalism at the Crossroads, Wharton School Publishing (Pearson), Upper 
Saddle River (NJ), 2005. 

19. Easterly, Thomas, The Elusive Quest for Growth, MIT Press, Cambridge (Mass), 2002. 

20. Palley, Thomas, A New Development Paradigm: Domestic Demand-Led Growth', Foreign 
Policy in Focus (www.fpif.org), September 1999. 

21. http://www.worldbank.org/ 

22. Serwer, Andy, 'The 00's: Goodbye (at Last) to the Decade from Hell', Time Magazine (www. 
time.com), November 24, 2009. 

23. http://www.nytimes.com/2009/12/15/us/15poll.html7em 

2. What the Reformer is Up Against 

1. Gertner, John, Why Isn't the Brain Green?', The New York Times (www.nytimes.com), 
April 19, 2009. 

2. Kristof, Nicholas, When Our Brains Short-Circuit', The New York Times, July 1, 2009 
(www.nytimes .com) . 

3. Mlodinow, Leonard, 'The Limits of Control', The International Herald Tribune (www.iht. 
com), June 16, 2009. 

4. Langer, Ellen & Rodin, Judith, 'Long-Term Effects of a Control Revelant Intervention with 
the Institutionalized Aged', Journal of Personality and Social Psychology, 35, pp 897-902, 
December 1977. 

5. Dunn, D, & Wilson, T, When the Stakes are High: A Limit to the Illusion of Control Effect', 
Social Cognition, pp 305-323, August 1990. 

6. Langer, Ellen, The Illusion of Control, Journal of Personality and Social Psychology, 32, pp 
311-328, February 1975. 

7. Langer, Ellen & Roth, J, 'Heads I Win, Tails It's a Chance: The Illusion of Control as a 
Function of the Sequence of Outcomes in a Purely Chance Task', Journal of Personality 
and Social Psychology, 34, pp 191-198, 1975. 



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3. Establishing Sustainability as an Objective 

1. Scott Jonathan T., Managing the New Frontiers, MES Publications, Panama City (Fla), 
2008 - and - Scott, Jonathan T., The Entrepreneur's Guide to Building a Successful 
Business, MES Publications, Panama City (Fla), 2009. 

2. Mento, A.J & Steel, R.P & Karren, R.J, 'A Meta-Analytic Study of the Effects of Goal 
Setting on Task Performance 1966-1984', Organizational Behaviour and Human Decision 
Processes, Feburary 1987, pp52-83. 

3. E-mail correspondence with Ken Tannenbaum (formerly) of Dow Chemical, 2006. 

4. Bohan, Peter, 'EU Biotech Storm Plants Few Seeds', Reuters News Service (Chicago), April 
22, 1999 - and - The Economist, Genetically Modified Company', August 15, 2002 
(posted on www.biotech-info.net/GMO_company.html). 

5. From e-mail correspondence with the company. 

6. Lovins, Hunter, The Economic Case for Climate Change, http://www.awarenessintoaction. 
com/article.php?url=the-economic-case-for-climate-action 

7. De Bias, Alexandra, interview with Ray Anderson titled 'Sustainable Carpet Tiles', the 
Australian Broadcasting Service (ABC Radio Network), www.abc.net.au/rn/science/earth/ 
stories/s28472htm. 

8. Orzech, Dan, At Clean Plants, It's Waste Not', Wired (online) http://www.wired.com/ 
science/planetearth/news/2005/08/68448, August 10, 2005. 

9. Parinello, Tony, 'Turning a Prospect's No Into a Yes', from the Entrepreneur magazine 
website, www.entrepreneur.com/article/o,4621, 309855, 00. html, July 14, 2003. 

10. This story was relayed to the author by one of his students. 

4. Mapping the Waste Minimization Process 

1. Scott, Jonathan T., Managing the New Frontiers, MES Publications (FLA), 2008. 

2. ESSP CLP, 'Product Stewardship Through Life-Cycle Analysis', Introduction to Sustainable 
Development for Engineering and Built Environment, www.naturaledgeproject.net/ 
ESSPCLP-Intro, 2007. 

3. Nemes, Judith, Dumpster Diving from Garbage to Gold', businessGreen.com, http:// 
www.businessgreen.com/business-green/analysis/2234107/dumpster-diving-garbage- 
gold, January 16, 2009. 

4. http://www.reuters.com/article/idUSN1943775220070419 

5. Aster, Nick, 'ColdWater Tide: Provoking the Ah-Ha Moment at Proctor & Gamble', http:// 
www.triplepundit.com/2009/ll/coldwater-tide-provoking-the-ah-ha-moment-at-proctor- 
gamble/, November 13, 2009. 



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References — © The Sustainable Business 2010 



5. On-Going Measurement and Record-Keeping 

1. Interview with Cheri Sustain (as recorded in: Scott, Jonathan T., Managing the New 
Frontiers, MES Publishing, Panama City (Fla), 2009). 

2. http://www.sniallbusinessnotes.com/operating/finmgmt/recordkeeping.html 

3. http://www.solovatsoft.com/outsourcing-green-development.html 

4. http://www.snh.org.uk/publications/on-line/advisorynotes/45/45.htm 

5. http://www.epa.gov/oecaerth/incentives/auditing/auditpolicy.html 

6. http://www.britsafe.org/download/audits-advisories/5-star-environmental-brochure.pdf 

7. Scott, Jonathan X, Managing the New Frontiers, MES Publishing, Panama City (Fla), 
2008. 

6. Taxes and Legislation 

1. 'Business Can Do It with Governments Help', The Economist (www.economist.com), May 
31, 2007. 

2. Hoerner, Andrew, 'Tax Waste not Work', www.tompaine.com, April 15, 2005. 

3. 'Big Business Pushes Bush on Carbon Caps, Top US CEO's Tell President Action on Climate 
is Necessary', CBS news/AP, http://www.cbsnews.com/stories/2007/01/23/business/ 
main2387501.shtml?tag=contentMain;contentBody, January 23, 2007. 

4. Butler, Jim, 'Hotel Lawyer: Why the SEC May Make You Go Green', www.hotellawblog. 
com, September 30, 2007. 

5. Kennard, Kenneth, 'Businesses Get a New Voice', www.greenbiz.com, 2007 (accessed 
March 2008). 

6. Web, Toby, 'Sustainable Consumption: We Will if You Will Say Consumers', Ethical 
Corporation (www.ethicalcorporation.com), July 21, 2006. 

7. Romm, Joseph, Why We Never Need to Buy Another Polluting Power Plant', www.salon. 
com, July 28, 2008. 

7. The Perils of Greenwashing 

1. Terrachoice Marketing, http://www.terrachoice.com/files/6_sins.pdf 

2. Source Watch, Why Do Businesses Greenwash?', www.sourcewatch.com 

3. Ellison, Katherine, 'Shopping for Carbon Credits', www.salon.com, July 2, 2007. 

4. Lovins, Amory & Lovins, Hunter & Hawken, Paul, A Road Map for Natural Capitalism, 
Harvard Business Review, May- June 1999, pp 145-158. 



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8. Service and the Performance Economy 

1. http://www.dow.com/safechem/about/story.htm 

2. http://www.cleanharbors.com/ 

3. Perthen-Palmsino, B. & Jakl, T., 'Chemical Leasing: the Austrian Approach, www. 
sustainable-chemistry.com, 2004. 

4. Douglas, Ed, 'Better by Design: Battling the Throwaway Culture', New Scientist, issue 
2585, January 4, 2007. 

5. Nevius, C.W., 'Disposing with the Fix-It Guys', The San Francisco Chronicle, Saturday, July 
16, 2005. 

6. White, Allen & Stoughton, Mark & Feng, Linda, 'Servicizing: the Quiet Transition to 
Extended Product Responsibility', (DuPont case study), published by the Tellus Institute 
and the US Environmental Protection Agency Office of Solid Waste, May, 1999. 

9. Leasing and the Performance Economy 

1. Hart, Stuart, Capitalism at the Crossroads, Wharton School Publishing (Pearson), Upper 
Saddle River (NJ), 2005. 

2. Hawken, Paul, Lovins, Amory, Lovins, Hunter, Natural Capitalism, Little, Brown & 
Company, Boston (Mass), 1999. 

3. Frenay, Robert, Pulse, Farrar, Straus & Giroux Publishing, New York, 2007 

4. White, Allen & Stoughton, Mark & Feng, Linda, 'Servicizing: the Quiet Transition to 
Extended Product Responsibility', (DuPont case study), published by the Tellus Institute 
and the US Environmental Protection Agency Office of Solid Waste, May, 1999. 

10. Cooperative Networking 

1. Scott, Jonathan T., The Entrepreneur's Guide to Building a Successful Business, MES 
Publications, Panama City (Fla), 2009. 

2. Lotti, Ricardo & Mensing, Peter & Valenti, David, A Cooperative Solution', Strategy + 
Business (www.strategy-business.com), July 17, 2006 

3. Batson, Daniel, 'How Social an Animal: The Human Capacity for Caring', American 
Psychologist, April 1990, vol 45, 99. 336-346. 



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References — © The Sustainable Business 2010 



11. Lean Thinking 

1. Friedman, Thomas, The World is Flat, Penguin Books Ltd., London, 2006. 

2. Cardiff Business School, 'What is Lean Thinking?', Lean Enterprise Research Centre, www. 
cardiff.ac.uk, May 2007 

3. Alukal, George & Manos, Anthony, 'How Lean Manufacturing can Help Your Mold Shop', 
www.moldmakingtechnology.com/articles/100204, 2007. 

4. Womack, James & Jones, Daniel, Lean Thinking: Banish Waste and Create Wealth in Your 
Corporation, Simon & Schuster, New York, 1996. 

5. Environmental Protection Agency, 'Lean Thinking and Methods', Lean Manufacturing and 
the Environment, www.epa.gov/lean/thinking/index.htm, May 2007. 

6. Lean Enterprise Institute, What is Lean Thinking?', www.lean.org, 2007. 

7. Nave, David, How to Compare Six Sigma, Lean, and the Theory of Constraints', Quality 
Progress (The American Society for Quality), www.asq.org, March 2002, pp. 73-78. 

8. The Agency for Healthcare Quality Research and Quality, www.ahrq.gov, 'Overview: What 
is Lean Thinking,' 2007 

12. Understanding the Importance of Customers 

1. CNBC European Business, 'How You Can Profit from a $600 Billion a Year Emerging 
Market', Jan/Feb 2007. 

2. http://walmartstores.com/FactsNews/NewsRoom/6503.aspx 

3. Saarte, Lynne, 'Things to Consider Before Going Green', http://www.articleblast.com/E- 
Commerce_and_Online_Businesses/General/Things_To_Consider_Before_Going_ 
Green_/See also: www.greenbiz.com 

4. Romm, J.J. & Browning, W.D., Greening the Building and the Bottom Line: Increasing 
Productivity Through Energy Efficiency', Rocky Mountain Institute publication D94-27, 
1994. Hart, Stuart, Capitalism at the Crossroads, Wharton School Publishing, 
(Pennsylvania) 2005. 

5. www.inclusivebusiness.org 

6. http://www.comcast.net/slideshow/finance-jobsecurity/nugget-market/ 

7. Winston, Andrew, Green Recovery, Harvard Business Press, 2009 (pplO-11) 

8. Edwards, L. & Torcellini, P., ' A Literature Review of the Effects of Natural Light on 
Building Occupants', National Renewable Energy Laboratory (Technical Report), Golden, 
Colorado, 2002. 

9. Manufacturing News, 'Natural Light Facility Boosts Productivity 19% at DPC, www. 
themanufacturer.com, July 11, 2002. 

10. NRDC, 'Building Green: Increase Employee Satisfaction and Productivity', www.nrdc.com, 
2007. 



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13. Managing Change 

1. Makower, Joel, 'Meeting Expectations', #884, www.grist.org, November 29, 2005. 

2. U.S. Department of Energy, The Office of Energy Efficiency and Renewable Energy, 
'Applying Six Sigma Methodology to Energy-Saving Projects', www.eere.energy.gov 

3. Lewin, Kurt, Field Theory in Social Science, Harper Press, New York, 1951. 

4. Band William, Creating Value from Customers, John Wiley & Sons, New York, 1991. 

5. This comment was sent to the author by Ken Tannenbaum. 

14. Putting Together a Team 

1. MnTAP (Minnesota Technical Assistance Programme), 'Building a Successful Pollution 
Prevention Team', University of Minnesota, www.mntap.umn.edu, 2007 - & - Ohio 
PPWM (Pollution Prevention and Waste Management), 'Organize the Pollution 
Prevention Programme', www.epa.state.oh.us/opp/guide/p2pch8.html. 

2. Janus, Irving, 'Groupthink, Psychology Today, November 1971, pp43-46. - & - Janus, 
Irving, Victims of Groupthink (2nd Edition), Houghton Mifflin, Boston, 1982 

15. Building Better Buildings 

1. This information was graciously provided (and edited) by the Rocky Mountain Institute 
(www.rmi.org) as it appeared in Managing the New Frontiers. 

2. www.boma.org 

3. NRDC, 'Building Green Increases Employee Satisfaction and Productivity' www.nrdc.org, 
July 2007. 

4. Edwards, L., & Torcellini, P., ' A Literature Review of the Effects of Light on Building 
Occupants', (technical report sponsored by the National Renewable Energy Laboratory), 
NREL/TP-55-30769, July 2002. 

5. Laudal, Terry, 'The Deeper Benefits of Going Green: More than Just Buildings', www. 
greenbiz.com, 2007.Whitfield, Kermit, Green by Design: On Cars - Manufactured 
Products', Look Smart, Gardner Publications, 2003. 

6. Copper Development Association, 'One Wire-Size Up Means Big Savings', www.copper. 
org,1996. 

7. Parker, D. & Fairey, P. & Mcllaine, J, 'Energy Efficient Office Building Design for a Hot and 
Humid Climate: Florida's New Energy Center', (sponsored by) the Florida Energy Office, 
1995. 

8. courtesy of Energy Star (www.energystar.gov). 



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References — © The Sustainable Business 2010 



16. Saving Water 

1. http://news.bbc.co.Uk/2/hi/science/nature/3747724.stm 

2. Gale, Sarah, 'Saving Every Last Drop', www.greenbiz.com, March 16, 2009. 

3. Proctor, Cathy, 'Building Owners are Flush with Big Drop in Water Bill', The Denver 
Business Journal, July 7, 2006. 

4. T&L, 'Water Efficiency in the Textile and Leather Industry', www.accepta.com/industry_ 
water_treatment. 

5. Crawford, Caroline, 'Good Things are Growing at Living Technologies Inc', Business People 
- Vermont, May 1999. 

17. The Macro Advantages of Micro Power 

1. Romm, Joseph, 'Peak Oil? Consider It Solved', www.salon.com, March 28, 2008 

2. www.greenpower.govs.org 

3. Seager, Ashley, Alternative Fuels: Now It's a New Game and Clean Energy is No Longer a 
Dream', The Guardian, London (UK), November 7, 2007, pg 26. 

4. Wee, Heesun, 'Buildings with Built-in Energy Savings', Business Week Online, www. 
businessweek.com, August 27, 2001. 

18. The Hidden History of Products 

1. Paster, Pablo, What's So Bad About Bottled Water Anyway?', www.salon.com, January 14, 
2008. 

2. Schmidt-Bleek, Frederick, Der Okologische Rucksack, Hirzel Verlag, 2004. 

3. Created by the authors own research. Nevertheless, while researching Managing the New 
Frontiers, it was pointed out that the Industrial Design Society of America comprised 
something similar 16 years earlier - long before sustainability had entered the author's 
vocabulary. Credit is therefore due to the IDSA and its pioneering work in this field. 

4. Hawken, Paul, Lovins, Amory, Lovins, Hunter, Natural Capitalism, Little, Brown & 
Company, Boston (Mass), 1999. 

5. Beitz, W, Designing for Ease of Recycling', Journal of Engineering Design, vol 4, No 1, 
1993, pp.11-23. 

6. World Challenge, 'Fireproof Juice', www.theworldchallenge.co.uk/fireproof.php, 2006. 

7. Ventner, Craig, A DNA-Driven World', The Richard Dimbleby Lecture, December 2007. 
GlaxoSmithKline, 'Eliminating Waste from Our Chemical Production Processes', www.gsk. 
com, 2003. 

8. Smith, Mark & Roy, Robin, & Potter, Stephen, 'The Commercial Impacts of Green Product 
Development', The Open University Design Innovation Group, DIG - 05, July 1996. 



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References — © The Sustainable Business 2010 



19. Minimizing Packaging 

1. Fielding, Zoe, 'Manufacturers Accountable for Product Waste', Manufacturers Monthly, 
April 6, 2004. 

2. 'Waste Prevention Pays Off: Companies Cut Waste in the Workplace, EPA/530-K-920-005, 
November 1993. 

20. Reuse, Remanufacturing, and Recycling 

1. Waste Prevention Pays Off: Companies Cut Waste in the Workplace, EPA/530-K-920-005, 
November 1993. 

2. Stahel, Walter, www.product-life.org, (Caterpillar Case Study), 1995. 

3. Business Week, 'Everything Old is New Again, www.businessweek.com, September 23, 
2006. 

4. Assembly Mag, Caterpillar Earns Green by Being Green', www.assemblymag.com, March 
12003. 

5. All Business, Green Can Mean Different Things', www.allbusiness.com, (Mississippi 
Business Journal), April 17, 2000. 

6. Lund, Robert & Hauser, William, "The Remanufacturing Industry: Anatomy of a Giant', 
Department of Manufacturing Engineering, Boston University, 2003. 

7. Ferrer, Geraldo & Whybark, Clay, 'From Garbage to Goods: Successful Remanufacturing 
Systems and Skills', Business Horizons, November 2000. 

8. Orzech, Dan, At Clean Plants, It's Waste Not', Wired (online) http://www.wired.com/ 
science/planetearth/news/2005/08/68448, August 10, 2005 

9. Recycling Guide, www.recycling-guide.org 

10. Institute for Local Self-Reliance, Waste to Wealth - Recycling Means Business', www.ilsr. 
org, 2007. 

11. EPA, 'Industrial Materials Recycling: Managing Resources for Tomorrow', RCC Fact Sheet 
(530-F-07-088), January 2007. 

21. Choosing a Sustainable Production Location 

1. Hollandar, Justin B., & Lowitt, Peter C, Applying Industrial Ecology to Devens: A Report 
for the Devens Enterprise Council, www.devensec.com/ecoreprt.html, March 2000. 

2. Adapted from Debert E co-Industrial Park: The Road Forward, the School for Resource & 
Environmental Studies, Dalhousie University, 2005. 

3. Jyrki, Heino & Tuomo, Koskenkari, 'Industrial Ecology in the Metallurgy Industry: the 
Harjavalta Industrial Ecosystem', (proceeding of the Waste Minimization and Resources 
Use Optimization Conference, June 10, 2004), University of Oulu, Finland, Oulu 
University Press, pp. 143-151. 



© EFMD www.efmd.org 



References — © The Sustainable Business 2010 



22. Clean Production 

1. The Environmental Management Industry Association of Australia, 'Cleaner Production - 
Reuse, Recycle and Treatment Options - Banskia Food Product Pty Ltd', www.emiaa.au, 
accessed 2007. 

2. UNEP, 'Cleaner Production - Key Elements', www.uneptie.org/pc/cp/understanding-cp/ 
home.htm. (2007) 

3. Smallbiz, 'What are the Benefits of Cleaner Production?', www.smallbiz.nsw.gov.au, 
Department of State and Regional Development, New South Wales, Australia (2007). 

4. Washington State Department of Ecology, 'Toxic Reduction Successes', 07-01-032, Office 
of Communication and Education, July 2007. 

5. Zelinski, Peter, 'Why Boeing is Big on Right-Size Machine Tools', Modern Machine Shop 
Online, www.mmsonline.com/articles/030601.htm, Sept. 2007. 

6. Scott, Jonathan X, Managing the New Frontiers, MES Publishing, Panama City (Fla), 
2008. 

7. Yu, Qian & Yun, Chen & Yanbin, Jiang & Lijuan, Zhang, Journal of Cleaner Production, 
vol 15, issue 10, November 2007, pp. 920-926. 

8. Energy Matters, Why Your Plant Should Be Efficient', US Department of Energy (Energy 
Efficiency and Renewable Energy), www.eere.government.org, 2007. 

9. Energy Innovators Initiative, Office of Energy Efficiency, Natural Resources Canada, 
http://oee.nrcan.gc.ca/eii, 2002. 

10. Hawken, Paul, Lovins, Amory, Lovins, Hunter, Natural Capitalism, Little, Brown & 
Company, Boston (Mass), 1999. 

11. White, Sue, 'Save Water, Save Waste, and Smell the Difference', The Sydney Morning 
Herald, www.smh.au, September 26, 2007. 

12. Korean NCPC, (for more information contact: jaekiml@>kitech.re.kr or jykang@kitech.re.kr, 
2007. 

23. Motors and Pumps 

13. Hawken, Paul, Lovins, Amory, Lovins, Hunter, Natural Capitalism, Little, Brown & 
Company, Boston (Mass), 1999. 

14. Energy Matters, Why Your Plant Should Be Efficient', US Department of Energy (Energy 
Efficiency and Renewable Energy), www.eere.government.org, 2007. 

24. Reducing Waste at Work: Getting Started 

1. AP wire service/CBS news, 'More Cities Taking Back Company Tax Breaks', http://www. 
cbsnews.com/stories/2010/01/02/business/main6047898.shtml 

Thanks to www.ecomodder.com and the students at Kozminski University (Warsaw, Poland) 
for supplying many of the suggestions mentioned in this section. 



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150 



About the Author 



About the Author 

Jonathan T. Scott (www.jonathantscott.com) is a lecturer, manager, and business leader 
with over 25 years of work experience in eight different countries. As a manager he was 
recognised for tripling productivity, reducing costs by up to 40%, and increasing net profits by 
over 55% at the companies where he worked. In the process he conducted three separate 
turn-arounds (the first occurred in a war zone; the second was described as 'the best of its kind 
in the country') and pioneered multi-million dollar projects in parts of the world where they 
previously did not exist. Currently, Scott runs his own education business, is the founder and 
director of the Center for Industrial Productivity and Sustainability, and serves as a faculty 
member at three business schools: Kozminski University (Warsaw, Poland), the Audencia 
Nantes School of Management (Nantes, France) and Bradford University (Bradford, UK). He 
has also taught at the University of Perugia (Italy). In 2009, he was presented with an 
'outstanding achievements in teaching' award for his research and performance as an educator 
and his work in sustainability and helping businesses lower their costs. 

Scott's education includes attending Brevard College (Brevard, North Carolina) before 
graduating with a Bachelor of Science degree from Florida State University (Tallahassee). He has 
also been a student at the Universite de Bourgogne (Dijon, France), earned an MBA (in 
management) from Western International University (at its former London, UK campus), 
received a teaching certification from Oxford Brookes University (Oxford, UK), and secured an 
MA (in management) from Kozminski University (Warsaw, Poland). His books include 
Fundamentals of Leisure Business Success (1998), The Concise Handbook of Management (2005), 
Managing the New Frontiers (2008), The Entrepreneur's Guide to Building a Success ful Business 
(2009) and the action/adventure novel On Wings (2007). His specialty subjects are 
management, entrepreneurship, and sustainability. 

Guest Editors/Reviewers 

Walter R. Stahel (www.product-life.org) is the head of Risk Management at the Geneva 
Association (Switzerland) as well as a respected business advisor and the founder and director of 
the Product-Life Institute (Geneva, Switzerland) Europe's oldest sustainability-based 
consultancy and think tank. Stahel's pioneering research and collaborative work in the field of 
sustainability stretch back several decades - firmly establishing him as one of the subject's 
founders. He is also a visiting professor at the Faculty of Engineering and Physical Sciences at 
the University of Surrey (UK) and a regular guest lecturer (in the graduate department) at 
Tohoku University (Japan). An alumnus of ETH, the Swiss Federal Institute of Technology 
(Zurich, Switzerland), Stahel is the author of several prize-winning academic papers and 
pioneering books including The Limits to Certainty (1989/1993), written with Orio Giarini 
(published in six languages) and The Performance Economy (2010). 

Trained as a lawyer, Hunter Lovins (www.natcapsolutions.org) is the president and founder 
of Natural Capitalism, Inc. and co-creator of the Natural Capitalism concept. In 1982 she 
co-founded the Rocky Mountain Institute and led that organisation as its CEO for Strategy until 
2002. Under her leadership, RMI grew into an internationally recognised research centre, widely 
celebrated for its innovative thinking in energy and resource issues. She has managed 
international non-profits, created several corporations, and is in great demand as a speaker and 

© EFMD www.efmd.ore 



About the Author — © The Sustainable Business 2010 



consultant. Her areas of interest and expertise include Natural Capitalism, globalisation, 
economic development, governance, land management, energy, water, green real-estate 
development and community economic development. She has taught at dozens of universities 
and is currently Professor of Business at the Presidio School of Management (the first accredited 
MBA programme in Sustainable Management). Lovins has co-authored nine books, dozens of 
papers and has earned numerous awards including a 1982 Mitchell Prize, a 1983 Right 
Livelihood Award (often called the 'alternative Nobel Prize'), a 1993 Nissan Award, and the 1999 
Lindbergh Award for Environment and Technology. She has several honorary doctorates, was 
named a "Hero for the Planet" by Time Magazine in 2000 and received the Loyola University 
award for Outstanding Community Service. In 2001 she received the Leadership in Business 
Award and shared the Shingo Prize for Manufacturing Research. In addition she has served on 
the Boards of one government, three private corporations and many public interest groups. In 
her spare time, Hunter is a volunteer fire fighter and an EMT She is also President of the 
Nighthawk Horse Company and is active training polo-crosse horses, and competing at polo- 
crosse and rodeo. 

Prof David Grayson CBE joined the Cranfield School of Management as director of the new 
Doughty Centre for Corporate Responsibility in April 2007, after a 30-year career as a social 
entrepreneur and campaigner for responsible business, diversity and small business 
development. This included the chairmanship of the UK's National Disability Council and several 
other government bodies, as well as serving as a joint managing-director of Business in the 
Community. He is a visiting Senior Fellow at the CSR Initiative of the Kennedy School of 
Government (Harvard University). He has masters degrees from the universities of Cambridge 
and Brussels, and an honorary doctorate from London South Bank University. He has been a 
Visiting Fellow at several UK and American business schools. His books include Corporate Social 
Opportunity: Seven Steps to make Corporate Social Responsibility Work for Your Business 
(Greenleaf - 2004 ww.greenleaf-publishing.com) and Everybody's Business (2001) - both 
co-authored with Adrian Hodges. He currently chairs Housing 21 - one of the leading providers 
of sheltered and extra care housing and care for older people (www.housing21.co.uk) 




Jonathan T Scott 



Walter R Stahel 



Hunter Lovins 



David Grayson 



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152 

About EFMD 



EFMD is an international membership organisation, based in Brussels, Belgium. With more 
than 750 member organisations from academia, business, public service and consultancy in 82 
countries, EFMD provides a unique forum for information, research, networking and debate on 
innovation and best practice in management development. 

EFMD is recognised globally as an accreditation body of quality in management education 
and has established accreditation services for business schools and business school programmes, 
corporate universities and technology-enhanced learning programmes. 

Within its scope, EFMD is committed to offer professionals and institutions involved with 
management learning and organisational development the opportunity to be part of a dynamic, 
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responsible leaders and managers. It is in this context that EFMD signed in 2003 a partnership 
agreement with the United Nations Global Compact and launched the Globally Responsible 
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- EFMD has over 40 years of experience in the coordination of projects and activities that 
foster an active dialogue and exchange between companies and academic organisations 

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EFMD is an international, not-for-profit, membership organisation, based 
in Brussels, Belgium. With more than 730 member organisations from 
academia, business, public service and consultancy in 82 countries, 
EFMD provides a unigue forum for information, research, networking 
and debate on innovation and best practice in management development. 

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